Start with the plain answer, because the question gets asked a lot. British electricity is the most expensive in the developed world for industry, on the government's own figures, because Britain prices its power off gas even when gas is a shrinking share of what it burns, and because policy levies sit on electricity bills. Everything else in this piece is the working, and the working leads somewhere uncomfortable: this is now a security problem as much as an economic one.
On 1 July 2026, Ofgem raised the energy price cap by 13 per cent and named the cause plainly: higher wholesale gas costs, driven by tensions in the Middle East. A confrontation two thousand miles from Dover repriced every kettle in England, Scotland and Wales within a single quarter. Nobody in Britain voted for that. The system produced it automatically.
I keep returning to that fact whenever someone tells me energy policy is a technical debate for specialists. A country that cannot set the price of its own electricity independently of events in the Gulf, or decisions in Moscow, carries an exposure that behaves like a defence vulnerability. It should be treated like one.
The numbers, plainly
Britain sells its industry the most expensive electricity among the member countries of the International Energy Agency. On the government's own figures, UK industrial users paid 25.85 pence per kWh in 2023. American industry paid 6.48 pence, roughly a quarter of the British price. French industry paid 17.84 pence, German industry 17.71, and the IEA median sat at 17.70. The Office for National Statistics puts the UK 46 per cent above that median, the highest of the twenty-four IEA countries it compared. The 2024 data tells the same story: highest for industry, with or without taxes. Households are close behind, paying the most in the IEA excluding taxes and second only to Germany including them. Under the cap in force this quarter, a British household pays 26.11 pence per unit, plus a 57.19 pence daily standing charge before it switches anything on.
What the rest of Europe pays
Eurostat's latest figures, covering the second half of 2025, show how wide the spread across the EU really is.
| Country | Business electricity price (euro cents per kWh) | Basis |
|---|---|---|
| Finland | 7.5 | Eurostat, non-household average, H2 2025 |
| France | 7.7 | Energy-intensive band (70 to 150 GWh), 2025 |
| Sweden | 9.7 | Eurostat, non-household average, H2 2025 |
| Spain | 9.9 | Energy-intensive band, 2025 |
| Italy | 14.4 | Energy-intensive band, 2025 |
| Poland | 14.4 | Energy-intensive band, 2025 |
| EU average | 18.4 | Eurostat, non-household average, H2 2025 |
| Germany | 22.6 | Eurostat, non-household average, H2 2025 (14.4 for the energy-intensive band) |
| Cyprus | 24.3 | Eurostat, non-household average, H2 2025 |
| Ireland | 25.5 | Eurostat, non-household average, H2 2025 |
| United Kingdom | roughly 29.7 | DESNZ industrial price 2023 (25.85p per kWh), converted at about £1 = €1.15 |
Consumption bands differ between rows, so treat the table as a ranking rather than a decimal-precise league. The ranking is the point.
The household picture is just as uneven. Hungarian households pay 10.8 euro cents per kWh, Maltese households 12.8, Bulgarian households 13.6, while Danish households pay 33.1 and Belgian households 35.0. The EU average is 29 cents. A British household on the cap pays roughly 30 euro cents at current exchange rates, before standing charges, which leaves only Ireland at 40.4 cents and Germany at 38.7 clearly above it.
Parts of Europe are expensive too, so the lesson is the spread, not the average. Finnish businesses buy power at roughly a quarter of the British price. French energy-intensive industry pays 7.7 cents because it draws on a nuclear fleet whose costs do not move when gas markets do. The interesting question is why Finland, France, Sweden and Spain stay cheap, and what they know that Britain keeps ignoring.
Why British power costs this much
The mechanism is well documented. Great Britain prices electricity at the margin: the most expensive plant needed in any half hour sets the price for every plant running in that half hour, and that marginal plant is almost always burning gas. Academic analysis by Zakeri and Staffell found that gas set the British wholesale price 97 per cent of the time in 2021 despite generating only 37 per cent of the electricity. In France the equivalent figure was 7 per cent. Analysis by Modo Energy suggests the British figure was still around 80 per cent of hours in 2024.
Meanwhile the underlying production keeps getting cheaper. 2025 was a record year for British renewables: 47 per cent of supply, against 28 per cent from gas and 10 per cent from imports, on Carbon Brief's analysis of the year. New offshore wind has been contracted at around £53 per MWh while the market has traded near £80, and the benchmark price reached roughly £99 in June 2026, up about a fifth since January. Britain increasingly produces cheap electricity and almost never pays the cheap price. Spain shows this is a choice rather than a law of nature: the share of hours in which gas sets the Spanish price has fallen from 52 per cent in 2021 to about 15 per cent by March this year.
The security case
Consider the last four years as two stress tests. The first came in 2021 and 2022, when the gas crisis and the invasion of Ukraine sent typical annual bills from £1,277 in winter 2021-22 towards a level above £4,000 by early 2023, a level the state had to cap with public money. The National Audit Office puts the final cost of the emergency support schemes at £44 billion, against an original estimate of £139 billion. The second test began this summer, when tension in the Middle East fed straight through to a 13 per cent rise in the cap. Britain passed neither test; it paid its way out of one and is absorbing the other.
The sequence is identical each time. An external event moves the gas price. The gas price sets the electricity price. The electricity price hits households, then businesses, then the inflation figures, then the public finances. The International Energy Agency estimates EU industrial electricity prices at roughly double American ones, and Britain sits above even that European benchmark. A country in that position has less room for everything else it wants to do, from rearmament to tax policy, because every gas shock arrives with an invoice attached. Cheap domestic electricity is shock absorption, the economic equivalent of armour.
What it is already costing
The Office for National Statistics reports that production in Britain's energy-intensive industries is at its lowest point since its records began in 1990. Between early 2021 and late 2024, output across those industries fell 33.6 per cent: basic metals and castings down 46.5 per cent, petrochemicals down 30.2 per cent, paper down 28.9 per cent. Further down the scale, ONS surveys found food and drink service businesses more likely than any other industry to plan cutting trading by at least two days a week to control costs.
The entrepreneurial damage is quieter and broader. Electricity is now a cost of entry to almost everything: the bakery oven, the machine shop, the server rack, the potter's kiln. When power costs four times the American price and well above the French one, whole categories of business fail before the first customer appears. That damage shows up as absence rather than headlines: the plant not built, the shop not opened, the data centre placed in Sweden instead.
What happens next
Three paths are open. If nothing changes, the next gas shock reruns 2022: tens of billions in emergency support, another inflation spike, another round of industrial closures, and the same debate afterwards. If Britain chooses decoupling, the route Spain is already walking, the work is specific: enough firm non-gas capacity in nuclear, storage and interconnection; reform of a market that hands the gas plant the pen on price; and moving policy levies off electricity bills so the cleanest power stops carrying the heaviest charges. And if the country simply drifts, the ONS has already documented what deindustrialisation by instalments looks like.
None of this is one party's failure. The market design dates from privatisation. The levies accumulated under governments of every colour. The Rough gas storage site was allowed to close in 2017, and part of it was reopened in a hurry five years later. But shared blame is no excuse for shared paralysis. Britain has spent four years treating expensive electricity as weather, something that happens to it. It is not weather. It is the bill for a system the country designed, and every external shock will keep presenting that bill until the design changes.
Questions readers ask
Why is electricity so expensive in the UK? Because Great Britain prices electricity at the margin and the marginal plant is almost always burning gas. Academic analysis by Zakeri and Staffell found gas set the British wholesale price 97 per cent of the time in 2021 despite generating only 37 per cent of the electricity, and Modo Energy puts the figure at around 80 per cent of hours in 2024. Policy levies loaded onto electricity bills add to the gap. So even a record renewables year like 2025, when clean sources supplied 47 per cent of British power, barely shows up in the price.
How do UK electricity prices compare with Europe and the United States? On the UK government's own figures, British industry paid 25.85 pence per kWh in 2023 against 6.48 pence in the United States, 17.84 in France, 17.71 in Germany and an IEA median of 17.70, and the 2024 data keeps the UK top of the IEA table with or without taxes. Eurostat data for the second half of 2025 shows Finnish businesses paying around 7.5 euro cents per kWh and French energy-intensive industry around 7.7, roughly a quarter of the British level.
What has energy dependence already cost the UK? The National Audit Office puts the cost of the 2022-23 emergency energy support schemes at 44 billion pounds. The Office for National Statistics reports that output in Britain's energy-intensive industries fell 33.6 per cent between early 2021 and late 2024, to the lowest level since its records began in 1990. And in July 2026 the price cap rose another 13 per cent on the back of Middle East tensions feeding through wholesale gas.
How could the UK bring electricity prices down? By decoupling the price of power from the price of gas, the route Spain is already walking: the share of hours in which gas sets the Spanish price fell from 52 per cent in 2021 to about 15 per cent by March 2026. For Britain that means enough firm non-gas capacity in nuclear, storage and interconnection, reform of a market in which the marginal gas plant sets the price, and moving policy levies off electricity bills.
Sources: Ofgem, price cap change for 1 July to 30 September 2026; Eurostat, electricity price statistics (H2 2025); PricePedia on Eurostat energy-intensive bands (May 2026); DESNZ, international industrial energy prices; Full Fact on the 2024 IEA comparison; ONS, the impact of higher energy costs on UK businesses; National Audit Office on the 2022-23 support schemes; Carbon Brief on gas and marginal pricing (Zakeri and Staffell; Modo Energy); Carbon Brief, UK electricity in 2025; IEA, Electricity 2026: prices; Trading Economics, UK power benchmark. Currency conversions are approximate, at about £1 = €1.15. All figures are official estimates and subject to revision.