21 April 2026
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Plans to better protect families and businesses by ending the unfair way international gas prices push up electricity prices across Great Britain have taken a major step forward.
Instability in the Middle East has shown that Britain’s reliance on international fossil fuel markets leaves families and businesses 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.
When wars, geopolitical tensions or supply shocks abroad push up global gas prices, electricity bills rise with them, exposing families to crises they have no control over.
Over time, this problem is easing as new clean energy projects are built on fixed price contracts that protect consumers from gas price volatility. But a significant share of renewable generation – about 30% of Britain’s power supply – is still exposed to wholesale prices set by gas, leaving families vulnerable when international prices rise.
Therefore, to shield families from future crises, the government is setting out new measures to ‘break the link’, reducing the impact that volatile gas prices have on the price of electricity. This will be done by:
- Voluntary long term fixed contracts: offered to existing low-carbon generators not on fixed‑price contracts – covering around a third of Britain’s power supply. This will help protect families and businesses from higher bills when gas prices spike, with contracts offered only where they deliver clear value for money for consumers
- An updated Electricity Generators Levy: immediate action to tax excess profits through the Electricity Generator Levy by raising the rate from 45% to 55%, ensuring an increased proportion of the extraordinary revenues generated when the gas price spikes is available to government to support businesses and households with the impacts of the conflict in the Middle East on the cost of living
Measures announced will further reduce the share of electricity exposed to gas price shocks and provide generators the economic incentive to move on to fixed contracts not linked to volatile gas. The government is monitoring the impact of the current crisis on energy bills and will be ready to step in to provide targeted support where necessary.
Britain has already moved from gas setting the price of electricity around 90% of the time in the early 2020s, to around 60% today. Through the government’s clean energy mission, it is estimated gas will set the wholesale price around half of the time by 2030.
Further measures: Heat Pump headlines
Further measures were set out to help cut bills for families and deliver more clean, homegrown power, these included:
- Bigger grants for households on heating oil and LPG: The crisis in the Middle East has impacted those on heating oil and LPG the hardest. The government announced an increase to the Boiler Upgrade Scheme (BUS) grant for properties heated by oil and LPG, taking the total grant to £9,000. This will help those households and small businesses in England and Wales most impacted by rising energy prices, particularly in rural areas, to electrify their heating and provide greater certainty over energy bills.
- EVs, heat pumps and solar: Plans to make it easier for people to switch to cheaper electric transport and heating, by making EV chargers, solar panels and heat pumps easier to install for renters, flat-dwellers and households without a driveway. They will be consulting this summer on changes to permitted development rights with the aim of making it easier to install air source heat pumps. The consultation will explore expanding permitted development including extending to non-domestic buildings and amending some siting restrictions, and seek views on how to enable more installations in flats. The government is exploring ways to ensure that low-income households can benefit from plug-in solar through our ‘Warm Homes Plan’ this year, and have earmarked up to £25 million with a view to piloting support for plug-in panels in partnership with local authorities and mayors: our vision is a street by street approach where tens of thousands of low-cost solar panels are delivered to those most in need.
- Heat pump manufacturing: Plans to back British jobs and innovation. New funding – backed by £90 million – will help build and expand heat pump factories in the UK, creating around 2,000 British jobs. Alongside this, extra investment in the £30 million Heat Pump Ready scheme will help companies design and test new, market ready heat pumps that are cheaper, smaller and easier to fit.
To read the announcement in full visit: www.gov.uk/government/news/decisive-action-to-break-influence-of-gas-on-electricity-prices
Reacting to the announcement:
Martyn Bridges, Director of External Affairs at Worcester Bosch, said: “We believe this is really good for a number of oil and LPG users in the UK.
“There are a few reasons why we’ve seen this announcement today. First, it is driven by the volatility of oil prices since the crisis in the Middle East, which has seen domestic heating oil prices double.
“Secondly, it is also likely down to the estimated underspend (as of 31 March) of the Boiler Upgrade Scheme (BUS) of around £65m, which signals that growth in retrofit heat pumps is starting to flatline and further action is required to make this government policy look like it's succeeding.
“While finance is a big motivator, I think it’s not the only factor in people’s reluctance to change from a boiler system to a heat pump system. There are many thousands of homes with an externally sited oil-fired combination boiler, and whilst a heat pump sits outside the property, the required hot water storage cylinder is mostly installed inside, where space is precious - meaning it's not a good fit for households that simply don't have the internal room to spare.”
Heat Pump Association UK, Chief Executive, Charlotte Lee, said: “The Boiler Upgrade Scheme plays a vital role in supporting households and small businesses to adopt heat pumps. Many who rely on heating oil have faced significant price uncertainty in recent months and lack the protection of the energy price cap.
“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.
“We also welcome the Government’s plans to cut 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.”
