Are Rising Energy Prices Making Gas Cheaper Than Electricity in The UK?

Key Takeaways:

• In 2025, UK households pay around 28p per kWh for electricity compared to 7p per kWh for gas.
• Despite gas being cheaper per unit, electricity use is rising as Britain pushes towards net zero.
• Energy bills vary significantly depending on property type, business size, and regional factors.
• Households and small businesses can cut costs by 20–30% through supplier switching and energy efficiency.

How Energy Prices Shape Everyday Life in 2025

Energy costs are front-page news in Britain, and for good reason. For many households, bills have nearly doubled since 2021, and small businesses report that energy is now one of their top three expenses. In fact, a 2024 Ofgem survey found that energy costs now account for 15–20% of overheads for SMEs.

For the average family or shop owner, the question isn’t academic; it’s practical: is it cheaper to rely on gas or electricity?

And with Britain’s push toward electrification (heat pumps, EVs, renewables), the stakes are even higher.

The Current Cost of Gas vs Electricity in the UK

As of early 2025, the average UK unit rates are:

• Electricity: 28p per kWh
• Gas: 7p per kWh

At first glance, gas looks four times cheaper. But there’s a catch: appliances differ in efficiency. A modern electric heat pump, for instance, can deliver three units of heat per unit of electricity, which changes the maths.

For most households, however, heating with gas remains cheaper day-to-day. That’s why the majority of UK homes still have gas boilers, despite the government’s push for greener alternatives.

Why Electricity Often Feels More Expensive Than Gas

When your electricity bill comes in, it can feel painfully high compared to gas. Why? First, because almost everything runs on electricity lights, appliances, and IT equipment. Second, the government places more green levies on electricity to fund renewable transition schemes.

So even though per-unit costs for gas are lower, most people feel the electricity sting more because it’s harder to avoid using it. Businesses, particularly those running equipment and lighting for long hours, find that electricity costs dominate their bills.

Factors Driving Rising Energy Prices in Britain

• Wholesale Market Volatility

Global energy markets remain unstable. Gas prices soared in 2022 due to geopolitical tensions, and while they’ve dipped since, volatility continues.

• Government Taxes and Levies

About 25% of electricity bills go towards levies and policy costs compared to about 2% for gas. This makes electricity appear disproportionately expensive.

• Infrastructure and Supply Costs

Maintaining the UK’s electricity grid is costlier than gas networks. Investment in renewables and smart grids pushes up electricity prices in the short term, even if they benefit us long term.

How Rising Gas Prices Are Changing the Equation

Gas may still be cheaper per unit, but prices have crept up. In 2025, gas prices are 35% higher than in 2021, and analysts predict continued upward pressure. As the UK phases out gas boilers by the mid-2030s, electricity will dominate home heating.

So while gas looks cheaper today, over the next decade, electricity will likely be the main focus, especially as technology like heat pumps improves efficiency and reduces reliance on fossil fuels.

Do UK Households Pay the Same Everywhere?

Let’s take a look at the regional differences, and the answer to the heading above: Not exactly. Electricity and gas prices vary across UK regions. Households in Scotland and the South West typically pay slightly higher rates due to distribution costs. For example, Scottish households paid about £80 more annually for electricity in 2024 compared to those in London.

Businesses face the same disparities, particularly in rural areas where supply is more expensive. This makes shopping around for tariffs even more important.

Is Switching Energy Source Worth It for UK Consumers?

Should households ditch gas for electricity, or vice versa? It depends. Gas boilers are still cheaper for heating today, but electricity is cleaner and future-proof. The government’s push for 600,000 heat pump installations a year by 2028 signals where things are headed.

For most people, the smart move isn’t swapping energy sources but switching suppliers. According to Ofgem, SMEs and households save £300–£3,000 annually by switching tariffs.

The Push Towards Renewable Energy and Electricity Demand

The UK’s legal commitment to reach net zero by 2050 is transforming how we power our homes and businesses.

As fossil fuels are phased out, electricity from wind, solar, and nuclear will dominate. While the transition comes with higher short-term costs due to infrastructure upgrades, the long-term payoff is worth it: greater price stability, cleaner energy, and reduced carbon emissions.

Analysts predict that by 2030, electricity will make up 60% of UK household energy use, compared to just 40% today. The shift isn’t just about sustainability, it’s about building a resilient, future-ready energy system for Britain.

Practical Tips to Lower Both Gas and Electricity Bills

• Switch suppliers annually: saves £300–£3,000.
• Upgrade to LED lighting: cuts electricity bills by 60%.
• Smart thermostats: reduce gas use by 10–15%.
• Insulate properly: saves £500+ a year on heating.
• Appliance upgrades: modern fridges, boilers, and IT equipment use far less energy.

These steps aren’t gimmicks. They’re proven, practical changes that businesses and households across the UK are already using to save money.

Average UK Household and Business Energy Costs (2025)

Sources: Ofgem, BEIS 2024

Gas vs Electricity Isn’t Just About Price

Here’s my honest take: we can debate gas vs electricity all day, but the real question is strategy. Treating energy like a fixed cost is a mistake. Businesses and households that plan energy use proactively, like they do with tax or payroll, always come out ahead.

Electricity may look pricier now, but as efficiency improves and renewables dominate, it’ll likely be the smarter long-term bet.

Final Thoughts: Choosing Smarter, Not Just Cheaper Energy

Gas may look cheaper per unit than electricity right now in the UK, but the story isn’t that simple. Prices are climbing, government policies are shifting, and with Britain racing towards net zero, electricity is set to take centre stage in the years ahead. Think of it less like a sprint for today’s cheapest deal and more like a marathon where planning smart keeps you ahead of the pack.

The real win isn’t just chasing pennies on this month’s bill; it’s building a strategy that protects you for tomorrow. Households and SMEs can save 20–30% a year by cutting waste, switching suppliers, and making smarter efficiency choices.

At Ethical Switch, we’re here to make those choices easier. We believe energy decisions should keep money in your pocket today, while helping your home or business stay greener, stronger, and ready for the future.

Frequently Asked Questions

Is Gas or Electricity Cheaper in The UK in 2025?

Gas is cheaper per unit at around 7p per kWh, compared to 28p per kWh for electricity, but efficiency makes electricity more competitive in some uses.

Why is Electricity More Expensive Than Gas in The UK?

Electricity carries higher infrastructure costs and government levies to fund renewables, making it appear more expensive compared to gas.

Will Electricity Eventually Become Cheaper Than Gas?

As renewable energy expands and gas boilers are phased out, electricity is expected to become more cost-effective by the 2030s.

Can Switching Suppliers Reduce My Gas and Electricity Bills?

Yes. Ofgem reports savings of £300–£3,000 annually for households and SMEs that switch tariffs instead of rolling over contracts.

How Can Small Businesses Reduce Their Energy Bills?

Switching suppliers, upgrading equipment, and adopting efficiency measures like smart thermostats and LED lighting can cut costs by 20–30% annually.