UK moves to cut electricity price link to gas
21st April 2026
UK: The UK government has taken a step towards breaking the link between gas and electricity prices in an effort to decarbonise the grid.
In a number of moves that could benefit the adoption of heat pumps, the government has said it plans to end “the unfair way” international gas prices push up electricity prices across Great Britain.
This will be done by offering long-term fixed contracts to existing low-carbon generators not on fixed‑price contracts. Britain’s reliance on international fossil fuel markets has left consumers exposed to volatile gas prices, driving the cost-of-living crisis even though much of the country’s electricity comes from cheaper renewables and nuclear.
While new clean energy projects are built on fixed price contracts that protect consumers from gas price volatility, a significant share of renewable generation – about 30% of Britain’s power supply – is still exposed to wholesale prices set by gas.
The government is also increasing the BUS grant to £9,000 for properties currently heated by oil and LPG. Streamlining outdated rules to unblock the grid and speed up clean, homegrown power have also been announced. This includes cutting unnecessary planning barriers for air-source heat pumps, making installation easier for non-domestic buildings and residents in flats and further funding to upgrade social homes over the next two years.
Commenting on the announcement, the Heat Pump Association UK’s chief executive, Charlotte Lee, said: “The Boiler Upgrade Scheme plays a vital role in supporting households and small businesses to adopt heat pumps. The £1,500 uplift for oil users will make the transition to heat pumps more affordable, helping to shield families and small businesses from volatile fossil fuel costs in the years ahead.
“The move to begin decoupling electricity prices from gas is a significant step that will help unlock the UK’s transition to electrification, ensuring that low-carbon heat is the most cost-effective option, always,” she added.
