--- title: UK Firms Pay Nearly Five Times as Much for Electricity as for Gas description: UK firms pay nearly five times as much for electricity as for gas, and a new 16-country index gives Britain the widest gap between policy and delivery. author: Darie Nani (Editor-in-Chief) date: 2026-10-27T13:14:23.828Z updated: 2026-10-27T13:14:23.843Z canonical: https://www.sovereignmagazine.com/article/uk-electricity-five-times-gas-electrification-index image: https://cdn.nanimediahouse.com/pexels-a-worker-operates-machinery-in-a-factory-with-molten-metal-a-3361235.jpg categories: Economy content_type: News region: United Kingdom publication: Sovereign Magazine schema_type: Article --- British businesses pay nearly five times as much per unit of energy for electricity as for gas, a day before Chancellor John Healey presents his first Budget. The Climate Change Committee says policy costs are [levied on the unit price of electricity at 20 times the rate of gas](https://www.theccc.org.uk/publication/progress-in-reducing-emissions-2025-report-to-parliament/). The Department for Energy Security and Net Zero (DESNZ) puts the average non-domestic price in the first quarter of 2026, including the Climate Change Levy, at [24.14p per kWh for electricity and 5.17p per kWh for gas](https://assets.publishing.service.gov.uk/media/6a4243767ac6fd9c6a94aadc/quarterly-energy-prices-june-2026.pdf), a ratio of about 4.7. The Electrification Competitiveness Index, published on Tuesday by the We Mean Business Coalition, an advocacy group of businesses, with support from the US energy research group RMI, gives the UK 82% for policy and enabling conditions, the third highest of 16 countries, but [38% for deployment](https://www.wemeanbusinesscoalition.org/blog/new-electrification-index-shows-uk-has-biggest-gap-between-policy-and-delivery), among the lowest and the widest gap of any country assessed. Its UK profile calls the price ratio, known as the spark gap, "the single biggest blockage to deployment" and says it is driven mainly by "levies loaded onto electricity bills rather than gas bills". ## Moving Policy Costs Could Cut the Ratio to Two or Three Times The Climate Change Committee, the independent body that reports to Parliament on emissions, has recommended making electricity cheaper since 2021, and in 2023 the government accepted a recommendation from the Independent Review of Net Zero to set out a clear approach to rebalancing policy costs between the two fuels. Changing how policy costs are charged could bring the UK's ratio down to between two and three times, the index's UK profile says, citing the committee. The coalition also notes that British steelmakers have warned that high electricity prices put them at a growing disadvantage against European rivals. "When electricity costs so much more than gas, grid connections can take years and financial support is uncertain, the incentive to invest in electric technologies is weakened," said Molly Walton, director of energy at the coalition. ## Last Year's Budget Moved Three-Quarters of the Renewables Obligation Off Bills Until 2029 In the Autumn Budget 2025, the government moved 75% of the cost of the Renewables Obligation, a levy that funds renewable power, onto general taxation from April 2026 and ended the Energy Company Obligation levy. DESNZ put the saving at £134 a year off the price cap for a typical dual-fuel household. The transfer runs only until 2029, and the index's UK profile says the remaining levies still sit mainly on electricity. The index's main UK asks are tax and spending measures of the kind Healey can announce on Wednesday: making the Renewables Obligation shift permanent beyond 2029, moving the remaining policy costs off electricity bills, and cutting VAT on electricity relative to gas in phases. The profile also wants a long-term successor to the Industrial Energy Transformation Fund, which co-funded the cost of converting industrial processes to electricity and has closed with no direct replacement. The British Industrial Competitiveness Scheme and the Supercharger help with high electricity prices, but the profile says neither pays the capital cost of converting a process, and it points to Germany's Klimaschutzverträge, contracts that pay companies the cost difference between low-carbon and conventional production over about 15 years. Prime Minister Andy Burnham's government has already taken VAT off household electricity, but [that cut ends on 31 March unless Healey extends it](https://www.sovereignmagazine.com/article/healey-first-budget-personal-allowance-energy-vat). ## Businesses Can Wait Up to 10 Years for a Grid Connection UK businesses can wait up to 10 years to be connected to the grid, according to the index, while the National Energy System Operator reorders a queue holding 739 GW of generation and storage projects. The profile also lists relatively high grid losses and low investment in grids and renewables relative to the size of the economy. ## The UK Has No Target for How Much of Its Economy Runs on Electricity Electricity supplies 18% to 21% of the UK's final energy use, and the government's Clean Power 2030 goal covers how that electricity is generated, not how much of the economy runs on it. The index recommends a national electrification target with a delivery plan. Its UK profile says households and businesses "aren't investing because policy commitments aren't credible for long enough". ## China, France and Spain Keep Electricity at Around Twice the Price of Gas or Less China, France and Spain make up the index's top group, with a spark gap of around two or less. China has the highest deployment score of the 16, at 68%, and France and Spain get 95% and 75% of their power from clean sources. The UK sits in the second group with Germany, India, Italy and Poland, and the report names the UK and Poland as the two countries where electricity is especially expensive against gas. ## FAQ **Q: What is the average cost of industrial electricity per kWh in the UK?** DESNZ figures for manufacturers, which exclude the Climate Change Levy, put the average at a provisional 17.47p per kWh for electricity and 3.73p for gas in the first quarter of 2026, a ratio of about 4.7, the same as for business users as a whole. **Q: How much would taking policy costs off electricity save?** In its 2025 progress report, published before last year's Budget, the Climate Change Committee estimated that removing policy costs from electricity would cut annual bills by £190 for a typical household with a gas boiler and £490 for one with a heat pump.