Source · Select Committees · Energy Security and Net Zero Committee
Recommendation 12
12
Acknowledged
Higher electricity prices significantly disincentivize consumer switch to electric heating systems
Conclusion
Electricity is much more expensive than gas in the UK because gas generation sets the marginal wholesale price and most levies are placed on electricity bills, rather than gas. This is a significant disincentive for consumers switching from fossil fuel to electric heating and a major barrier to decarbonising homes. Lowering the price of electricity relative to gas has been the tipping point needed to encourage the mass uptake of low carbon heating systems in some European countries. (Conclusion, Paragraph 90)
Government Response Summary
The government acknowledges the issue of electricity being more expensive than gas as a disincentive for decarbonising homes and states its commitment to work relentlessly to translate cheaper clean power costs into lower consumer bills, though it provides no specific actions or timelines.
Government Response
Acknowledged
HM Government
Acknowledged
For the government to achieve the clean power 2030 target it is critical that our electricity price reflects the cheaper wholesale price of clean energy. As the Committee concludes, the current distribution of policy costs means that the cost of low carbon technologies is artificially inflated compared to fossil-fuel powered alternatives. The price disparity between electricity and gas needs to be addressed to make it more attractive for consumers to install clean technologies like heat pumps. Over this Parliament the government will be working relentlessly to translate the much cheaper wholesale costs of clean power into lower bills for consumers. This will be core to every decision we make. This is a complex issue and there are difficult decisions to be made which must be informed by robust research and analysis. We are determined that we deliver on both fairness and affordability.