Why is electricity more expensive than gas? Gas & electricity levies explained.

It is a well-known fact that electricity, when generated by renewable energy sources, is a “cleaner” solution than gas. Fossil fuels are harmful, as they generate carbon dioxide when burned. This carbon dioxide then sits in our atmosphere and holds on to heat, causing the earth’s temperature to rise.

A number of UK energy suppliers are starting to provide renewable electricity – such as our energy partner Outfox the Market, who offer 100% renewable electricity generated in UK wind farms.

The UK government have banned the installation of gas appliances in all new build properties from 2025 and the UK as a whole is legally bound to have net zero carbon emission by 2050. It is only a matter of time before more restrictions are introduced in an attempt to do away with harmful gas.

What does this mean for our future? More and more homeowners are making the switch to electrical heating now, in an attempt to future proof their properties in time for the impending 2050 deadline.

Although the Government are making significant steps towards a cleaner future, it will take the UK 700 years to transition to low carbon heating based on its current trajectory.

One factor, which may be holding people back from making the switch to an all-electric home, is the difference between gas and electricity levies, which is having a direct impact on energy costs in the UK.

What is a levy?

A levy is an obligatory payment to the Government. In this case, it’s a payment, which makes up part of your energy bill, that in turn is to pay for the privilege of using either electricity or gas in your home.

Depending on which fuel you choose, your levy may be higher.

Currently, 23% of the total cost of electricity is made up of levies, whereas only 2% of the total cost of gas is payments for levies. This is a significant difference and one that is clearly causing a majority of the population to stick with gas, despite Government warnings about the harm caused by gas.

By enforcing such a high levy on electricity, the unit rate (or price per kW for electricity) is significantly higher than the price per unit for gas. With a focus on switching the nation over to a clean, electric future; imposing such costs will do nothing but deter people from making the switch for fear of a more expensive electricity bill.

Domestic homes emit 20% of the UK’s greenhouse gases, and the only way to bring this figure down is to switch to cleaner fuels. But while the costs for cleaner fuels are higher due to levies, it’s no wonder a majority of UK homes still utilise gas for powering their heating systems.

Here at Fischer, we know that the future is electric, which is why we offer a wide range of electric space and water heating solutions.