The electricity-to-gas price ratio is a key concept in discussions about transitioning from gas to electricity. While it’s not something most people encounter in daily life, it comes up frequently in energy policy debates and industry conversations.

Put simply, the electricity-to-gas price ratio compares the cost of electricity with the cost of gas. This comparison matters because it shapes real-world decisions for households and businesses: whether it’s cheaper to run a heat pump than a gas boiler, or how attractive electrification looks across different sectors.

This explainer sets out what the consumer electricity-to-gas price ratio is, why it matters for decarbonisation, and why many argue that lowering it is the most important part of the UK’s energy transition.

Electricity is currently a lot more expensive than gas. The electricity-to-gas price ratio is the unit price of electricity divided by the unit price of gas. It describes how much more a kWh of electricity costs consumers compared with a kWh of gas.

Sometimes referred to as the ‘spark gap’, an increasing ratio indicates a higher relative price of electricity versus gas – a key barrier to electrification. By 2050, the use of all fossil fuels in homes – mainly gas – will need to be halted in favour of heating that runs on renewable electricity. Lowering the price ratio will mean households can save money by going electric, speeding up home decarbonisation.

Electric heat pumps are incredibly energy efficient, and use about 3-4 times less energy than gas boilers to produce the same amount of heat. However, if electricity is much more than three times more expensive than gas, this means that a heat pump will cost roughly the same to run as a gas boiler. Allowing households to benefit from the efficiency, by lowering the relative price of electricity, will mean more people will be willing to invest in the higher upfront costs of installing a heat pump.

In the UK, the current unit cost of electricity is capped at 24.67p per kWh for April to June 2026. The cost of gas is 5.74p kWh. This gives a price ratio of 4.3.

But fuel prices can – and do – move. Let’s start with a hypothetical example. If electricity prices stayed level, but the unit cost of gas fell, the price ratio would go up. This is because the denominator in the price ratio fraction has got smaller, while the numerator has stayed the same. In contrast, were gas prices to rise while electricity prices held steady, then the ratio would instead fall. So far, so simple.

But in reality, the prices of the two fuels are closely connected. This is because in the UK, gas – with its high marginal costs – is used to generate electricity at times when renewable capacity, like wind or solar, runs out. Of course, if the two prices change by the same amount (a 20% increase or decrease, for example), then the ratio remains unchanged because the fraction is the same.

Let’s take a look at how this idea has played out in recent data. Remember, what we are really interested in here is the distance between the two prices. As the lines converge or diverge, the price ratio changes, dictating the relative affordability of electricity versus gas over time.

Using data from Ofgem, we can track the historical unit price of both fuels. The gap between electricity and gas prices has remained fairly stable over the past seven years, apart from during mid-2022 to mid-2023 when price surges for both electricity and gas – triggered in part by supply disruptions associated with Russia's full-scale invasion of Ukraine – led to a huge divergence of the two series. In early 2023, gas prices reached 17p/kWh, with electricity costs peaking at 67.3p/kWh.

Tracking the price ratio helps clarify the story. The price ratio was actually at its highest before the start of the energy crisis. In 2021, the unit price of gas was just 3p/kWh, versus electricity costs of 17.2p/kWh – giving a price ratio of 5.7. In early 2022, the price of both fuels jumped, but gas prices grew more in relative terms. This pulled the price ratio down from 5.1 at the end of 2021 to 3.95 in early-2023.

Since the end of the 2021-2023 ‘energy crisis’ period, the price ratio has remained stable at around 4, though it has started to inch up over the past year or so (despite falling slightly this past quarter as a result of the UK government’s Budget intervention). When Ofgem next sets its prices in July 2026, we will start to see how the current conflict in the Middle East affects the relative prices of the two fuels here in the UK.

Data from Eurostat shows that the UK energy-to-gas price ratio is higher than in most countries across Europe. At the end of 2025, the UK had a consumer price ratio of 4.2. In comparison, Portugal’s ratio was 1.89, the Netherland’s was 1.45, and Sweden’s just 1.25. Towards the middle of the table, Ireland – which has a broadly comparable housing stock and home heating landscape to the UK – had a price ratio of 2.68 last year.

While it is tricky to make direct comparisons between countries, the difference in price ratios can still tell us something about the particular challenges facing the UK. When it comes to home decarbonisation, countries with a higher electricity-to-gas price ratio face greater barriers to electrification. This is because the price ratio determines the cost of running a heat pump versus a gas boiler.

Let’s walk through a hypothetical example of how this works in practice. Across countries, there is a weak negative correlation between the energy-to-gas price ratio and heat pump sales (adjusted by population). While there are many other factors that affect heat pump sales, this trend can help paint a picture of the UK’s relative performance in home decarbonisation and how changes to the price ratio might help the country’s electrification journey.

As shown in the previous bar chart, in 2025 the UK had a price ratio of 4.2 compared with Ireland’s ratio of 2.68. All else being equal, if the UK had an Ireland-level price ratio, it is arguable that there would be greater demand for heat pumps as their running costs would be comparatively lower.

In this hypothetical scenario, we can trace up to the trend line to estimate the potential boost in heat pump sales. Doing so implies an increase from 3.5 to 12 sales per thousand households – a 240% jump. This is, of course, very optimistic and relies on several strong assumptions about heat pump demand. Even so, a much more conservative estimate of, say, a 30% increase implies a potential 29,400 additional heat pump sales across the UK in 2024 – a significant boost.

The price ratio is a key metric for measuring how close the UK is to creating the right economic conditions for home decarbonisation. In basic terms, a lower/falling ratio is good news and a higher/climbing ratio is not. This has direct implications for major policy programmes, including both the UK government’s Clean Power Action Plan and the Warm Homes Plan.

For these programmes to deliver at scale, the UK government should act to reduce the electricity/gas price ratio to 2.9 or below. This is broadly the point at which the whole life cost of a heat pump with current subsidies is the same as a gas boiler. Reaching this threshold helps ensure that low-income households that get a heat pump funded through a Government scheme will not see their bills rise.

The most durable route to reduce the price ratio lies in addressing the structure of energy bills themselves. The UK must take action on the current energy bill system to fix the unfair levy system and offer a clear route to cheap energy. By rebalancing levies, we can accelerate the decarbonisation of home heating, support fuel-poor households with electrical heating and assist all households in the transition away from gas with its volatile prices.

It is important to note that the price that consumers pay for each kWh of gas and electricity includes not just the cost of the fuel supplied itself, but many other costs – known as non-commodity costs – like investments in energy infrastructure, suppliers’ operating costs and profits, and environmental and social schemes. In fact, the price of fuel itself makes up only half of the cap price of gas (about 52%) and even less for electricity (about 44%). Because these costs weigh more heavily on electricity than gas, they inflate the price ratio. Rebalancing these costs offers a clear, policy-driven way to improve the economics of electrification.

Other external factors like changes in global gas prices, can also move the UK price ratio. For example, a spike in gas costs as a result of the ongoing Iran conflict is expected to lower the ratio and ‘improve’ the relative economics of electrification for UK households. But relying on volatile international markets is neither predictable nor desirable, particularly given the impact of price shocks on households and businesses, especially those consumers living in or near fuel poverty.

Ultimately, while the electricity-to-gas price ratio is an important guide, it cannot be viewed in isolation. Changes in the ratio, however they arrive, have real consequences for consumer bills. Lower relative electricity prices are essential for decarbonisation, but so too is ensuring the energy remains affordable overall, as the absolute price of all fuel types is right at the heart of people’s concerns about the rising cost of living.

To keep up to date with our work on energy bills and the price ratio, follow A sustainable future at Nesta on Linkedin.