Gas or electricity: Which is cheaper?

Gas or electricity: Which is cheaper?

When you need to decide how to heat and run your home, the cost difference between gas and electricity is one of the biggest factors to weigh up. If you look at the unit price alone, gas is significantly cheaper. Under the latest price cap, a unit of electricity costs about three and a half times as much as a unit of gas on average for Direct Debit customers.^[1]

However, comparing the two energy sources is rarely that simple. The cheapest option for your home depends heavily on how efficient your heating system is, how much energy you use, and the daily standing charges you pay just to be connected to the grid. While gas boilers lose some heat during the burning process, modern electric heat pumps can generate up to four times as much heat as the electricity they take in. This can close the gap in running costs completely.

The energy market is also shifting quickly. With recent price cap changes in July 2026 and new government policies aiming to push households towards greener energy, the balance between gas and electricity is changing. This guide explains how the costs compare right now, the practical trade-offs of each fuel, and what you should consider if you are thinking about upgrading your heating system.

How much do gas and electricity cost right now?

Ofgem reviews its energy price cap every three months for households in Great Britain on default tariffs, including standard variable tariffs. The cap limits the maximum a supplier can charge these customers for each unit of energy and their daily standing charge. It does not cap the total bill, so using more energy means paying more.^[1]

Following the latest update on 1 July 2026, energy prices rose across the board. This increase was largely driven by higher wholesale gas prices linked to global conflicts. Gas unit prices went up by roughly 28%, while electricity unit prices increased by around 6%. Despite this, gas remains the cheaper fuel by a wide margin when you look at the raw unit rate.

For a typical dual-fuel household paying by Direct Debit, the price cap is £1,663 a year from 1 July to 30 September 2026. Your actual bill will still depend on your energy use, region and payment method.

The unit rate is the amount you pay for the actual energy you use, measured in kilowatt-hours (kWh). The standing charge is a fixed daily fee you pay to keep your home connected to the energy network, regardless of whether you use any gas or electricity that day.

Because both fuels carry a daily standing charge, households that use very little energy often find that a large chunk of their bill goes towards simply being connected to the grid. If you live in a well-insulated modern home and use very little heating, the fixed costs make up a bigger percentage of your total spend. This is why some households choose to cap off their gas supply entirely and run their home on electricity alone. Doing this saves you the gas standing charge, which adds up to roughly £106 a year.

Heating your home: Gas vs Electricity

Heating is usually the biggest energy expense for a UK household. Because it takes a lot of energy to keep a house warm through the winter, the choice between gas and electricity has a massive impact on your annual bills. To understand which is cheaper, you have to look at how efficiently each system turns fuel into heat.

Traditional gas boilers burn gas to heat water, which is then pumped through your radiators. During this burning process, some heat is lost through the exhaust flue. Even the newest, most advanced gas boilers are only about 90% efficient. This means that for every 10 units of gas you pay for, you only get 9 units of heat inside your home. However, because gas is so cheap per unit, a gas boiler is still a very cost-effective way to heat a house.

Electric heating systems are different. If you use direct electric heating — such as plug-in radiators, panel heaters, or an electric boiler — the system is 100% efficient. Every single unit of electricity you pay for is converted directly into a unit of heat. There is no waste. But because electricity costs four to five times as much as gas, running direct electric heaters is generally much more expensive than using a gas boiler.

The calculation changes completely if you use an electric heat pump. A heat pump takes heat from the outside air or the ground and compresses it to warm your home. Think of it like a fridge working in reverse. Because it moves existing heat rather than creating it from scratch, a heat pump is incredibly efficient. It can produce up to four units of heat for every one unit of electricity it uses. This high efficiency can offset the higher unit cost of electricity, making a heat pump just as cheap — or even cheaper — to run than a gas boiler over the long term.

Gas systems are also known for heating a home quickly. A powerful gas boiler can get your radiators piping hot in a short space of time. Heat pumps, on the other hand, run at lower temperatures over longer periods. They are designed to keep your home at a steady, comfortable temperature all day rather than providing a sudden blast of intense heat. This means you have to manage your heating differently, but it provides a very comfortable living environment.

Hot water and cooking costs

Heating water accounts for a large portion of a typical household energy bill, often making up around 14% to 18% of the total cost. Choosing how to heat your water is an important decision that affects your daily spending.

As with central heating, heating water with gas is generally cheaper than using electricity. A gas combi boiler heats water on demand as soon as you turn on the hot tap. While the boiler loses a little efficiency in the process, the low unit price of gas keeps the cost down. If you have an older gas system with a hot water cylinder, it will still cost less to run than a standard electric setup.

Electric water heating usually relies on an immersion heater inside a hot water tank. Because electricity is expensive, heating a whole tank of water can add up quickly. Some older advice suggests leaving an immersion heater on all day to ensure a steady supply of hot water, but this is a very expensive way to run your home. It is much cheaper to set a timer so the water heats up only when you need it.

When it comes to cooking, gas hobs have long been popular because they offer instant heat and fine temperature control. However, electric ovens are usually preferred for baking because they heat the space more evenly. Because gas is cheaper per unit, cooking a meal in a gas oven costs less than cooking the same meal in a traditional electric oven. Electric ovens also take longer to heat up, meaning they draw power for a longer time.

That said, the way we cook is changing. Small electric appliances like microwaves, slow cookers, and air fryers are highly efficient. Because they heat a much smaller space and cook food quickly, they use very little electricity. Using an air fryer for a quick meal is often cheaper than turning on a large gas oven, despite the difference in unit rates.

Installation, maintenance, and government support

The running costs on your monthly bill are only one part of the picture. You also need to factor in the cost of installing, servicing, and repairing your chosen system. Over a decade, these extra costs can easily wipe out the savings you make on cheap fuel.

Gas boilers require regular maintenance. To keep them safe and efficient, you need to pay for an annual service by a registered heating engineer. If a gas boiler breaks down, the parts can be expensive, and replacing the whole unit will cost thousands of pounds. Because gas involves burning a fossil fuel inside your home, there is also a small but serious risk of carbon monoxide leaks, meaning you must keep your alarms tested and your system well maintained.

Electric heating systems are generally much cheaper to maintain. Direct electric heaters, like modern storage heaters or electric radiators, have very few moving parts. They do not require an annual safety check, they do not carry a carbon monoxide risk, and they often last twice as long as an average gas boiler. They are also cheaper and faster to install.

Heat pumps are the exception to this rule. While they do not need the same strict safety checks as a gas boiler, they are complex machines that require a large upfront investment. Installing an air-source heat pump can cost significantly more than fitting a new gas boiler. However, there are several government schemes currently available to help households cover these costs and improve their energy efficiency.

Eligibility for these schemes can vary depending on where you live in the UK, your property type, and your household income. Always check the official GOV.UK website or speak to your energy supplier to find out exactly what support you can claim.

Environmental impact and future changes

Cost is not the only reason households are rethinking how they heat their homes. The environmental impact of our energy choices is becoming harder to ignore. Heating our homes is responsible for around 15% of the greenhouse gases released in the UK, making it the single biggest source of carbon dioxide from the average household.

Gas is a fossil fuel. While it burns cleaner than oil or coal, it still pumps a huge amount of carbon dioxide into the atmosphere. To meet the UK's target of reaching net-zero carbon emissions by 2050, the government is actively moving the country away from gas. In England, the Future Homes and Buildings Standards will come into force on 24 March 2027 and require new homes to be built with low-carbon heating and high levels of energy efficiency.

Electricity is now the greenest energy option. Over the last decade, heavy investment in wind and solar farms has transformed the national grid. Zero-carbon sources now generate a massive portion of the electricity we use every day. If you sign up for a tariff backed by 100% zero-carbon electricity, it can reduce the carbon footprint associated with your electricity use, although your home still draws power from the shared grid.

The government is also taking steps to make electricity more affordable. Historically, the price of electricity has been tied to the volatile wholesale gas market. This means that when gas prices spike — as they did ahead of the July 2026 price cap rise — electricity bills go up too, even if that electricity was generated cheaply by a wind farm. The government is currently working to break this link through a new Wholesale Contracts for Difference scheme, which offers fixed-price contracts to green energy generators.

To speed up the transition to green technology, the new Prime Minister announced in July 2026 that VAT will be entirely cut from electricity bills for six months, starting in October 2026. This policy deliberately excludes gas, making electricity a more attractive financial choice through the winter months and encouraging households to electrify their homes.