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Why UK electricity is so expensive
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UK industrial electricity cost 26.63p a kWh including taxes in 2024, against an IEA median of 16.33p — the UK has the highest industrial electricity prices of the 25 IEA members in the 2024 table. It is not mainly tax at the point of sale: household electricity carries 0% VAT, and the UK is dearest even before taxes. The cost is built in further up the chain: gas usually sets the wholesale price, carbon costs ride on that, policy levies sit on electricity rather than gas, and network and balancing costs are rising. Figures from DESNZ, derived from IEA data.
Figure as of 1 July 2024. Source: DESNZ, derived from IEA Energy Prices and Taxes.
Key figures
- 26.63pUK industrial electricity a kWh, 2024 down on a year earlier: −0.52p (−1.9%) vs 1 July 2023
- 16.33pIEA median, industrial, 2024 The middle of the member countries
- 1 of 25UK rank for industrial prices, dearest first IEA members, 2024
- 30.45pUK household electricity a kWh, 2024 down on a year earlier: −5.45p (−15.2%) vs 1 July 2023
- 3.3×Electricity against gas, per kWh under the price cap 26.32p against 7.97p
Sources: DESNZ, derived from IEA Energy Prices and Taxes, Ofgem.
What is the short version?
- Industrial prices are 3.4 times their 2010 level: 7.84p a kWh then, 26.63p in 2024.
- Households: 2 of 27 IEA members at 30.45p a kWh, against a median of 20.89p.
- Carbon: gas plants pay a UK-only top-up of £18 a tonne, and because gas sets the price it lands on every unit.
- Per unit, electricity costs 3.3 times as much as gas under the price cap, partly because levies sit on electricity.
- What cheap countries have: large hydro and nuclear fleets, or plentiful home-produced gas.
How much more does the UK pay?
Figure as of 1 July 2024. Source: DESNZ, derived from IEA Energy Prices and Taxes.
Figure as of 1 July 2024. Source: DESNZ, derived from IEA Energy Prices and Taxes.
Figure as of 1 July 2024. Source: DESNZ, derived from IEA Energy Prices and Taxes.
Figure as of 1 July 2024. Source: DESNZ, derived from IEA Energy Prices and Taxes.
The numbers behind this chart
| Year | Pence per kWh |
|---|---|
| 2010 | 7.84 |
| 2011 | 8.08 |
| 2012 | 8.47 |
| 2013 | 8.89 |
| 2014 | 9.38 |
| 2015 | 9.50 |
| 2016 | 9.28 |
| 2017 | 9.79 |
| 2018 | 10.43 |
| 2019 | 11.55 |
| 2020 | 12.26 |
| 2021 | 13.66 |
| 2022 | 19.47 |
| 2023 | 27.15 |
| 2024 | 26.63 |
Figure as of 1 July 2024. Source: DESNZ, derived from IEA Energy Prices and Taxes.
Why does the gas price set the electricity price?
Britain generates a large share of its power from gas and heats most homes with it. In a wholesale market the last power station needed to meet demand sets the price for everyone, and in Britain that is usually a gas plant. So when gas prices spike, electricity follows even though much of it comes from wind and nuclear. The UK now relies on imported LNG and Norwegian pipeline gas rather than cheap Russian pipeline supply, which pushed its gas costs up alongside the rest of Europe.
How much do carbon costs add?
Gas power stations pay for their emissions under the UK Emissions Trading Scheme, plus a UK-only top-up, the Carbon Price Support, of £18 a tonne. Because gas usually sets the price, that carbon cost lands on every unit sold, not just on the gas-fired ones.
Why are policy costs on electricity rather than gas?
Renewables subsidies and other schemes have mostly been loaded onto electricity bills rather than gas bills, for historical reasons rather than by design. Businesses pay more of these than households, which is a large part of why UK industrial prices stand out even more than household ones.
What do network and balancing costs add?
The grid was built around big power stations near cities. Wind is mostly in Scotland and offshore, so the grid needs major new lines, and until they are built the system operator pays wind farms to switch off and gas plants elsewhere to switch on. Both costs go on bills.
What do cheaper countries have that the UK does not?
The countries with the cheapest power in the developed world have either large hydro and nuclear fleets (Norway, Sweden, Canada, France) or abundant home-produced gas (the United States). The UK has neither in the same quantity: North Sea gas is declining and much of the nuclear fleet is closing before new plants arrive.
Those who blame policy argue
- Renewables subsidies, carbon taxes, balancing and capacity payments add over £15bn a year to electricity costs.
- Grid spending to connect remote wind will keep pushing bills up.
- Other countries shield industry from these costs more than the UK does.
Those who blame gas argue
- The 2022 and 2026 price spikes were driven by gas, not by green levies.
- Policy costs are now about 5% of a household bill.
- Contracted wind lowers the wholesale price compared with gas.
- Less gas dependence is the way to stop the spikes recurring.
Common questions
- Why is UK electricity so expensive?
- Chiefly because gas usually sets the wholesale price, carbon costs ride on that price, policy levies were loaded onto electricity rather than gas, and network and balancing costs are rising. Tax at the point of sale is a small part: the UK is dearest even before taxes.
- Does the UK have the most expensive electricity in the world?
- For industry, yes among IEA member countries: 26.63p a kWh in 2024, the highest of 25. For households the UK is among the highest but not the highest.
- Are green levies why UK electricity is expensive?
- They are part of it, not the whole of it. Policy costs are about 5% of a household bill, while wholesale energy is the largest single component and is set mainly by gas.
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The figures belong to the bodies that published them and are used under their terms, listed in Sources for this page; most are Crown copyright under the Open Government Licence. Only our own words, analysis, charts and derived calculations are ours, published under CC BY 4.0: reuse them, including commercially, if you credit Tekstak Ltd and link back to this page.
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- UK industrial electricity price, annual: get it from DESNZ, derived from IEA Energy Prices and Taxes DESNZ, derived from IEA Energy Prices and Taxes: IEA terms (IEA data is excluded from the Open Government Licence) link only
- UK household electricity price, annual (IEA basis): get it from DESNZ, derived from IEA Energy Prices and Taxes DESNZ, derived from IEA Energy Prices and Taxes: IEA terms (IEA data is excluded from the Open Government Licence) link only
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Sources for this page
| Source | Publisher | Figures as of | Updated | Licence |
|---|---|---|---|---|
| Industrial electricity prices in the IEA (QEP 5.3.1) | DESNZ, derived from IEA Energy Prices and Taxes | 1 July 2024 | annual | IEA terms (IEA data is excluded from the Open Government Licence) link only |
| Domestic electricity prices in the IEA (QEP 5.5.1) | DESNZ, derived from IEA Energy Prices and Taxes | 1 July 2024 | annual | IEA terms (IEA data is excluded from the Open Government Licence) link only |
| Ofgem, energy price cap unit rates and standing charges | Ofgem | 22 September 2026 | quarterly | Open Government Licence v3.0 |
Each source's figures are used under the licence shown. Our own words, analysis, charts and derived calculations are ours, under CC BY 4.0.