Currently, in the UK, the electricity and gas price ratio is 3.97 which is the highest in Europe and nearly double EHPA’s recommendation of 2.

The report illustrates that those European countries with a high ‘spark gap’ (the ratio between household electricity and gas prices) also have a lower annual total of sales of heat pumps per household.

A significant contributor to high electricity prices in the UK is the disproportionate application of Environmental and Social Obligations – often referred to by Government as “policy costs” and known commonly as “green levies”. Domestic electricity consumers, bear around 85% of these levies, which means a typical heat pump consumer pays £170 more than an equivalent gas boiler consumer in levy costs per annum.

In November 2023, the HPA proposed the introduction of an Interim Domestic Heat Pump Tariff Discount to provide a short-term solution to reducing the price of electricity relative to gas, whilst fundamental reforms to the electricity market were considered and implemented. This report and extensive background analysis sets out the implications of a range of options to tackle one of the key challenges in accelerating heat pump deployment, running costs.

Commenting on the recently published report, Charlotte Lee, HPA Chief Executive said: “This latest data release yet again highlights the crucial need for the UK Government to act quickly to tackle the disparity between electricity and gas prices to accelerate heat pump deployment. The Labour Government have been clear they are the party of delivery, and it is imperative that the new Government now prioritise the publication of a consultation on this issue.”

UK heat pump sales per household remain the lowest across Europe with only 2.08 heat pumps per 1000 households sold. This highlights the scale of the opportunity that remains in the UK, which will only be realised if swift, decisive action is taken to reduce the price of electricity relative to gas.