Executive summary
The United Kingdom has become one of the most expensive developed countries in which to use electricity.
In 2024, the average price paid by UK households was 30.45p per kilowatt-hour, including taxes. That was:
- 46% above the median across the countries included in the International Energy Agency comparison
- higher than the United States, Canada, France and Japan
- the second-highest household electricity price in the G7, behind Germany
The situation facing British industry was even worse.
The average UK industrial electricity price reached 26.63p per kilowatt-hour in 2024. This was:
- 63% above the IEA median
- higher than every other G7 country for which comparable industrial data was available
- more than twice the prices reported for manufacturers in countries including Canada, South Korea and Türkiye
These are not minor differences. They represent a serious economic disadvantage.
Britain cannot expect households to replace gas heating with heat pumps, businesses to electrify industrial processes, or international companies to build factories and data centres here while electricity remains substantially more expensive than in competing economies.
The objective of energy policy should therefore be clear:
Make the United Kingdom one of the most affordable places in the G7 to use electricity.
Britain has become an electricity-price outlier
The UK possesses some of the best renewable-energy resources in Europe.
It has large areas suitable for offshore wind, an established electricity network, growing solar generation and significant potential for energy storage.
Yet British households and businesses are not receiving electricity at internationally competitive prices.
Official Department for Energy Security and Net Zero figures show that the UK’s electricity prices have moved far above those charged in many other advanced economies.
The comparison below uses annual prices converted into pounds sterling and expressed in pence per kilowatt-hour. Household prices include taxes. Industrial prices include taxes that cannot be reclaimed.
G7 household electricity prices
Average household electricity price in 2024
| G7 country | Price per kWh |
| Germany | 33.46p |
| United Kingdom | 30.45p |
| Italy | 30.26p |
| France | 23.73p |
| Japan | 16.46p |
| United States | 12.86p |
| Canada | 10.32p |
Source: Department for Energy Security and Net Zero, using International Energy Agency data.
The UK had the second-highest household electricity price in the G7.
British households paid approximately:
- 28% more than households in France
- 85% more than households in Japan
- 137% more than households in the United States
- 195% more than households in Canada
Germany was the only G7 country with a higher recorded household price.
This matters because electricity is supposed to become the main energy source for transport and home heating. High electricity prices make electric vehicles, heat pumps and electric heating less financially attractive, even where they use energy more efficiently than fossil-fuel alternatives.
G7 industrial electricity prices
Average industrial electricity price in 2024
| G7 country | Price per kWh |
| United Kingdom | 26.63p |
| Italy | 23.52p |
| Germany | 20.99p |
| France | 16.33p |
| Japan | 13.21p |
| Canada | 7.43p |
| United States | Comparable 2024 figure unavailable in this dataset |
Source: Department for Energy Security and Net Zero, using International Energy Agency data.
Among the G7 countries with a comparable price reported for 2024, the UK had the highest industrial electricity price.
British industrial users paid approximately:
- 13% more than users in Italy
- 27% more than users in Germany
- 63% more than users in France
- more than twice the price paid in Japan
- more than three and a half times the Canadian price
The UK’s industrial electricity price was also approximately 63% above the median of the IEA countries included in the government’s comparison.
This is a direct competitive disadvantage for British manufacturing.
How the UK compares with major G20 economies
Not every G20 country reports electricity prices through the same methodology. A complete G20 ranking can therefore create misleading comparisons if figures from different datasets, consumer bands, exchange rates and tax systems are combined.
The most responsible comparison is to use the G20 economies for which comparable IEA figures are available.
Household electricity prices in selected G20 economies
| Country | Price per kWh |
| Germany | 33.46p |
| United Kingdom | 30.45p |
| Italy | 30.26p |
| France | 23.73p |
| Japan | 16.46p |
| United States | 12.86p |
| Canada | 10.32p |
| South Korea | 10.21p |
| Türkiye | 4.24p |
The comparison shows that the UK is not simply expensive by European standards. It is expensive when measured against other major economies around the world.
The United States, Canada and South Korea all provide electricity to households at less than half the average UK price recorded in this dataset.
Industrial electricity prices in selected G20 economies
| Country | Price per kWh |
| United Kingdom | 26.63p |
| Italy | 23.52p |
| Germany | 20.99p |
| France | 16.33p |
| Japan | 13.21p |
| South Korea | 10.97p |
| Türkiye | 10.10p |
| Canada | 7.43p |
Britain sits at the top of this comparison.
A company deciding where to manufacture a product, process materials, operate refrigerated storage or build energy-intensive computing infrastructure must account for these differences.
Electricity does not have to be the largest business expense for it to affect investment decisions. For electricity-intensive businesses, the gap can determine whether a British site is commercially viable at all.
This is a relatively recent competitive failure
Britain was not always such an extreme outlier.
The divergence became particularly visible following the international energy crisis that began in 2021 and intensified after Russia’s invasion of Ukraine in February 2022.
Electricity prices increased across much of Europe. However, prices in several competing countries subsequently stabilised or fell more quickly than those in Britain.
UK non-domestic electricity prices remained at 25.97p per kilowatt-hour in the final quarter of 2024, according to the Office for National Statistics. That was still approximately 75% higher than at the beginning of 2021.
The problem is therefore not merely that every country experienced an energy crisis. It is that the design and funding of the British electricity system have allowed exceptionally high prices to persist.
Why does the UK pay so much?
The price on a British electricity bill is not simply the cost of generating the electricity.
It includes or supports several separate parts of the energy system:
- Wholesale generation costs
- Transmission and distribution networks
- Balancing and constraint costs
- Environmental and social policy obligations
- Supplier operating costs
- Supplier margins
- Carbon costs
- Taxes
Many of these costs fund legitimate services or public-policy objectives.
The problem is the decision to recover so many of them through electricity bills.
This inflates the price of each unit and makes electricity appear more expensive than the underlying cost of generating it.
Gas continues to influence the price of electricity
Britain increasingly generates electricity from wind, solar and other low-carbon sources, but gas-fired power stations remain important for balancing supply and demand.
Under the existing wholesale-market structure, the most expensive generator required to meet demand can have a significant influence on the market price.
This means a gas-fired power station may help determine the price even when much of the electricity being supplied during that period comes from generators with lower operating costs.
The International Energy Agency reported that UK wholesale electricity prices rose by approximately 40% in the first half of 2025, averaging just under $115 per megawatt-hour. It attributed part of this increase to colder weather, lower wind output and greater use of gas-fired generation.
As long as electricity prices remain closely exposed to international gas markets, British consumers will not consistently receive the full benefit of low-cost domestic renewable generation.
Network and policy costs are loaded onto electricity
Electricity bills are also used to fund:
- local distribution networks
- the national transmission network
- renewable-support contracts
- balancing services
- social and environmental schemes
- recovery of costs arising from failed suppliers
- parts of the smart-meter programme
- other regulatory obligations
Some of these costs are currently collected through unit prices and some through standing charges.
This creates two problems.
First, it makes every additional unit of electricity more expensive.
Second, it works against electrification. Households and businesses are being encouraged to switch their cars, heating and industrial processes to electricity while the cost of those policies is itself being concentrated on electricity bills.
High electricity prices damage household electrification
A heat pump can produce several units of heat from one unit of electricity.
However, electricity can cost several times more per kilowatt-hour than gas. The efficiency advantage of the heat pump is therefore partly or entirely cancelled by the price imbalance between the two fuels.
The same problem applies to:
- electric heating
- electric hot-water systems
- electric vehicles without access to low overnight rates
- households living in flats without gas
- homes that cannot install solar panels or batteries
Electricity should be the affordable fuel of the future.
Instead, Britain has made it one of the most expensive ways to purchase energy.
High electricity prices damage British industry
High industrial electricity prices affect sectors including:
- steel and metals
- glass and ceramics
- chemicals and fertilisers
- paper production
- food manufacturing
- refrigerated storage
- hospitality
- retail
- data centres
- electric transport
- advanced manufacturing
The effect extends beyond the electricity bill paid by an individual factory.
Higher electricity costs are passed through supply chains into:
- food prices
- building materials
- manufactured goods
- public infrastructure
- business rents and service charges
- exports
The government has already acknowledged that British industrial electricity prices are among the highest in the G7 and has introduced targeted support for selected industries.
However, targeted discounts do not correct the underlying market.
They protect a limited number of businesses while leaving smaller manufacturers, hospitality businesses, retailers and other electricity users exposed to the full cost.
Selective subsidies are not a complete solution
The government can reduce electricity bills for selected industries by transferring costs elsewhere.
Those costs may be recovered from:
- other electricity customers
- household bills
- businesses outside the scheme
- general taxation
- future borrowing
Targeted support may be justified for strategically important industries, but it does not create a genuinely competitive electricity market.
The better objective is to reduce the structural cost of electricity for the whole economy.
Britain should not need a growing collection of exemptions simply to stop important industries from closing or relocating.
Our proposed reform
This policy starts with the outcome the country needs:
A standard household electricity price of 15p per kilowatt-hour, supported by a lower overnight rate.
The market and regulatory structure should then be redesigned to deliver that outcome.
1. Separate gas capacity from the ordinary electricity price
Gas-fired power stations would receive a separately regulated capacity payment for remaining available when required.
Their exceptional operating costs would no longer be allowed to inflate the value of every unit generated by lower-cost sources across the wider market.
Gas would remain available for security of supply, but it would be treated as backup capacity rather than the normal benchmark for the price of electricity.
2. Remove policy and carbon costs from electricity bills
Where the government chooses to fund carbon reduction, social programmes or national policy objectives, those costs should be transparent.
They should be financed through general taxation rather than hidden inside the price of each unit of electricity.
This would prevent public-policy costs from discouraging households and businesses from electrifying.
3. Replace standing charges with a regulated network subscription
Local electricity networks would be funded through a clear and regulated monthly subscription based on household electricity requirements.
The subscription would replace the standing charge and the network costs currently concealed within unit prices.
It would be reviewed annually and subject to a mandate to remain as low as safely possible.
4. Socialise national transmission infrastructure
High-voltage cables and other strategic transmission infrastructure are national assets.
The cost of building nationally important infrastructure should be supported through general taxation and long-term public investment rather than recovered immediately through electricity unit prices.
This would spread the cost fairly across the country and across the useful life of the infrastructure.
5. Establish a national resilience fund
Any regulated surplus from network subscriptions and higher-consumption tariff bands would be directed into a resilience fund.
The fund would support:
- remote and higher-cost network regions
- local grid reinforcement
- substation batteries
- community energy storage
- resilience against severe weather
- faster connections for homes and businesses
This would allow the country to strengthen its network without continually increasing the standard electricity price.
6. Create a transparent supplier margin
Suppliers would buy electricity based on the cost of generation and add a visible, regulated or competitively controlled margin.
Transmission, policy programmes, bad debt and unrelated system costs would no longer be hidden inside the wholesale-to-retail unit price.
The standard rate would therefore reflect:
generation cost + supplier margin
This would make it much easier for the public to understand what they are paying for.
What would a 15p electricity price mean internationally?
A standard price of 15p per kilowatt-hour would place British household electricity below the 2024 prices reported for:
- Germany
- Italy
- the existing UK market
- France
- the IEA median
- Japan
It would move the UK much closer to the electricity prices available in the United States, Canada and South Korea.
A household using 2,700kWh of electricity a year would pay:
- £822.10 for the units at 30.45p per kWh
- £405 for the same units at 15p per kWh
That represents a unit-cost reduction of approximately £417 a year, before considering the separate regulated network subscription.
For homes using electricity for a heat pump or electric vehicle, the potential benefit would be considerably larger.
Cheap electricity is an economic policy
Affordable electricity is not only a household-bill policy.
It is an industrial, transport, housing and growth policy.
Lower electricity prices would:
- improve the economics of heat pumps
- reduce electric-vehicle running costs
- support British manufacturing
- make the UK more attractive to data centres
- reduce hospitality and retail costs
- encourage businesses to replace fossil fuels
- make renewable energy visibly beneficial to consumers
- reduce inflation throughout supply chains
- strengthen energy security
- retain more investment and employment in Britain
Countries with abundant and affordable electricity will hold a significant economic advantage in the coming decades.
Electricity will power transportation, heating, manufacturing, automation, artificial intelligence and an increasing proportion of the wider economy.
Britain cannot afford to enter that future with some of the highest prices in the developed world.
Policy objective
The UK should adopt a measurable national electricity-price objective:
The United Kingdom will become one of the three most affordable G7 countries for household and business electricity.
Progress should be reported annually using comparable international data.
The government should publish:
- the UK household electricity ranking
- the UK industrial electricity ranking
- the price difference against the G7 median
- the price difference against major trading partners
- the proportion of each bill attributable to generation, networks, policy costs and taxation
Energy policy should be judged not only by how much generating capacity is constructed, but by whether households and businesses receive affordable electricity from it.
Frequently asked questions
Does Germany not have more expensive household electricity?
In the 2024 DESNZ comparison, Germany had a higher average household electricity price than the UK.
However, German industrial electricity prices were lower than those in Britain. Germany uses exemptions and cross-subsidies to protect parts of its industrial economy.
The purpose of this comparison is not to claim that every British customer always pays more than every customer elsewhere. It is to show that the UK consistently sits near the expensive end of international comparisons and performs particularly badly for industrial electricity.
Are electricity prices directly comparable between countries?
No international comparison is perfect.
Prices may be influenced by:
- exchange rates
- taxes
- subsidies
- consumption bands
- regulated tariffs
- geography
- industrial exemptions
- the time period measured
For that reason, this page primarily uses one consistent official dataset compiled by DESNZ from International Energy Agency information.
The comparison should be treated as an indicator of relative competitiveness rather than a quote for every household or business.
Why not include every G20 country?
Several G20 countries do not report directly comparable prices through the same IEA dataset.
Combining unrelated datasets could compare different consumption bands, tax treatments and time periods.
The G20 section therefore uses the major economies for which comparable figures were available. A country should not be shown as cheaper or more expensive unless the evidence is measured on a sufficiently consistent basis.
Is the UK price entirely caused by renewable energy?
No.
The price is the result of the wider electricity-market and funding structure.
Renewable projects, networks, balancing costs, gas generation, supplier costs and government policies all contribute in different ways.
The problem is not simply the existence of any one cost. It is the way costs are accumulated and recovered through electricity bills.
Would moving costs into taxation make them disappear?
No.
Moving a cost does not make it disappear.
It changes how the cost is collected and who bears it.
National infrastructure and government policy are more fairly funded through transparent taxation than by increasing the price of every unit of electricity.
General taxation can reflect ability to pay, while electricity consumption is increasingly an unavoidable requirement for heating, transport and participation in the modern economy.
Would 15p electricity require permanent government subsidy?
The intention is not to subsidise every unit indefinitely.
The objective is to redesign the market so that the retail unit price reflects the cost of generating and supplying electricity, while networks and national policy are funded separately and transparently.
The 15p rate would remain subject to inflation and genuine changes in generation costs. It would not be permanently frozen regardless of economic conditions.
Conclusion
Britain has built renewable generation, accepted higher bills to finance the transition and repeatedly been told that cheap clean electricity is the future.
Consumers and businesses must now receive the benefit.
In 2024, UK household electricity was approximately 46% above the IEA median, while industrial electricity was approximately 63% above it.
That is not internationally competitive.
It increases household bills, undermines electrification, weakens manufacturing and discourages investment.
The country should stop treating high electricity prices as unavoidable.
The objective should be simple:
Separate generation from network and policy costs, reform the electricity market and make Britain one of the cheapest G7 countries in which to use electricity.
Cheap electricity is not a luxury.
It is essential national infrastructure and the foundation of a competitive modern economy.
Supporting documents and data
- Department for Energy Security and Net Zero: Domestic electricity prices in the IEA — QEP Table 5.5.1
- Department for Energy Security and Net Zero: Industrial electricity prices in the IEA — QEP Table 5.3.1
- Department for Energy Security and Net Zero: Quarterly Energy Prices
- International Energy Agency: Electricity 2025 — Prices
- Office for National Statistics: The impact of higher energy costs on UK businesses, 2021 to 2024
- Related policy: Delivering a Standard 15p Electricity Price
- Related policy: Replacing Standing Charges with a Network Subscription
- Related policy: Electricity Market Reform
- Related policy: National Energy Resilience Fund