Why electric heating struggles to pay its way, and what Energy UK wants changed

If you've looked at swapping gas heating for a heat pump, or running a process on electricity instead of gas, you've probably hit the same problem as everyone else. Per unit, electricity costs far more than gas, so even very efficient electric equipment can struggle to pay its way.

What Energy UK has said

On 20th October 2026, Energy UK, the trade body for energy companies, published a report called Sparking Change. It looks at the "spark gap", which is simply how many times more a unit of electricity costs than a unit of gas.

For businesses, it puts that gap at between 4.2 and 4.5 times today, depending on the size and type of business. On current policy, it expects only a small fall, to between 3.9 and 4.3 times by 2029/30. Its view is that this won't be enough to persuade businesses to move away from gas heating. Read Energy UK's summary of the report

What it's asking for

• Moving the costs of two older renewable schemes, the Renewables Obligation and Feed-in Tariffs, off business electricity bills and into general taxation.
• Taking the Climate Change Levy, a government tax on business energy, off electricity.
• A Business Energy Upgrade scheme to help smaller firms, and better tax allowances for efficient, low-carbon equipment.

These are proposals, not decisions. The Chancellor delivers the Autumn Budget on 28th October, and nothing has been promised yet.

What it means for you

• If you're planning to replace gas boilers or gas-fired process heat in the next few years, run the numbers both ways: at today's prices, and with lower policy costs on electricity. A project that looks marginal now could look quite different if policy shifts.
• Don't wait on a promise. Cutting the electricity you buy from the grid, through efficiency, better controls or on-site solar, helps whatever the Budget says.
• If you're a manufacturer, check whether you qualify for BICS, the British Industrial Competitiveness Scheme. For eligible sites it already removes Renewables Obligation and Feed-in Tariff costs from April 2027, but applications close at 11:59pm on 30th November 2026.

If you're weighing up gas against electric for heating or a process and would like a second pair of eyes on the numbers, I'm happy to have a chat.