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British households are paying more for electricity than gas in any other country in Europe – in a blow to Ed Miliband’s net zero drive.
The Government wants households to install 600,000 heat pumps every year and is offering grants of £7,500 as an incentive.
However, the taxes levied on electricity bills in Britain mean that running a heat pump can still be more expensive than the cost of a gas boiler.
by the high costs of installation, the need to insulate homes and the noise generated by the electricity-powered units.
But industry experts said homeowners were further put off by the fact that electricity is much more expensive than gas – because of environmental levies that the Government demands.
and gas in Europe. This means that electricity in the UK costs between four and five times as much as gas.
While a heat pump tends to be around four times more energy efficient than a gas boiler, the price disparity means that in order for consumers not to see their bills increase, it has to be.
. According to a breakdown of energy bills by regulator Ofgem, environmental and social costs made up 2.46pc of a typical gas bill in 2021. The same figure for electricity bills was 25.48pc.
The average dual bill paid 15.3pc for climate taxes. Industry experts told The Telegraph that the tax proportion has remained very similar, despite calls for years to relieve the burden on electricity bills.
It means that installing a heat pump can actually lower the energy efficiency rating of your home.
Stuart Fairlie, of Elmhurst Energy, a body that issues close to one million Energy Performance Certificates (EPCs) a year, said: “Currently, all green taxes get applied to electricity supply rather than gas and since heat pumps run on electricity, that pushes up the cost.
“That means, when it comes to EPCs, heat pumps are at a disadvantage against traditional gas boilers. We think that needs to change to help Britain hit its net zero targets.”
David Cowdrey, acting chief executive of the renewable energy standards scheme the MCS Foundation, said: “The outdated levies placed on electricity bills are holding the country back from the switch to clean heating and tackling fuel poverty.
“Our research shows that removing levies from electricity bills would knock £130 to £300 off household energy costs at the same time as incentivising heat pump uptake. It is a win-win, with broad support from many sectors.”
But others warned that placing the burden on gas consumers would hit the most vulnerable hardest.
Peter Smith, of campaign group National Energy Action, said: “Business as usual isn’t working, with electricity customers paying more compared to gas, despite having taken action to reduce their emissions.
“But if the Government gets any changes wrong then low-income and vulnerable gas customers, who are unlikely to be able to afford a heat pump without a full grant, would be hit hard. It’s no wonder this area of policy has moved so slowly.”
Claire Coutinho, the shadow energy secretary, said: “The Labour Government’s approach to energy is nonsensical. Ed Miliband will make the cost of electricity eye-wateringly expensive, while also rushing to move people on to electrified home heating.”
and 28 million homes still rely on it directly – meaning there is a lot of work to do to reduce the country’s reliance on it.
amid freezing temperatures this winter
. It is a climbdown from Labour’s previous position, which would have seen all new gas boilers banned from that date.
, slashing what installers will pay for failing to sell enough heat pumps by 80pc.
An initial penalty, proposed by the previous Conservative administration, had been set at £5,000 per missed unit but was dropped first to £3,000 and then to £500.
Boiler makers had said that they would have to put up the prices of their products by £120 to cover the penalties.
A Department for Energy Security and Net Zero spokesman said:“Our mission is for clean power by 2030 because clean, homegrown energy is the best way to protect billpayers and boost Britain’s energy independence.
“The energy shocks of recent years have also shown the urgent need to upgrade British homes and our Warm Homes Plan will make them cheaper and cleaner to run, rolling out upgrades from new insulation to solar and heat pumps.
“We are making heat pumps more affordable by providing £7,500 towards the cost through the Boiler Upgrade Scheme and have recently announced plans to remove planning constraints to make them easier to install.”
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