PHAM NEWS | APRIL 2026 14 Energy Matters Report: Electricity levies keep bills high


Britain’s electricity pricing system means low-income households are paying more on levies than on staple foods such as bread, rice, and cereal, a new report has found. These social and


Rush to adopt low-carbon systems as fuel costs soar


With energy prices under pressure from the conflict in the Middle East, many UK households are turning to low-carbon technologies to reduce reliance on fossil fuels and protect themselves from rising costs. This is according to data from Octopus Energy, which shows a surge in demand, with the company recording its busiest month ever for enquiries and sales of solar panels, heat pumps and EV chargers. Soaring gas prices and petrol costs at 12-month highs have prompted homeowners to look for more predictable energy sources. The data found:


• Solar sales up 54%, as buyers ‘supersize’ systems with 12 panels


instead of the usual 10. • Heat pump sales climbed 51%,


with oil and gas users switching off fossil fuels for good.


• EV charger sales up 20%, as drivers look to escape


unpredictable costs at the pumps. Energy independence is now the top reason cited for homeowners making the switch.


East Anglia has emerged as the UK’s low-carbon capital, topping national charts for both heat pump and solar installations. To keep up the momentum, Octopus has begun operating a fast-track for oil-reliant households – replacing expensive oil boilers with clean heat pumps in just 10 days from the initial quote to the final installation. Public appetite for these technologies is also at an all- time high. Google Trends shows searches for solar are up 20%, and heat pumps are up 30%, with users trying to understand how heat pumps work.


Octopus has recently launched a live data dashboard tracking the performance of its heat pump fleet. It reveals Octopus Cosy heat pumps are over four times more efficient than gas boilers, with 80% of owners already paying less for their heating than they did with fossil fuels. Rebecca Dibb-Simkin, chief product officer at Octopus Energy, comments: “We are seeing a massive shift as people stop just asking and start acting. British families are tired of being held hostage by global fossil fuel prices. By switching to solar and heat pumps, they are becoming their own power stations – locking in low costs and protecting their wallets for the long term.”


environmental levies are currently placed on electricity bills at three times the rate of gas. According to the report by charity The MCS Foundation, addressing this imbalance by moving levies into general taxation would save households between £170 to £530 a year on their energy bills. Such a move would lift nearly


900,000 households out of fuel poverty, in addition to the 900,000 households already projected to rise above the fuel poverty threshold as a result of the electricity cost reductions announced in the Autumn Budget 2025, while also accelerating the transition from fossil fuel heating to heat pumps. Under the proposal to shift levies into general taxation, more than 5.8 million households would save


at least £300 per year on their energy bills. Garry Felgate, CEO of The


MCS Foundation, says: “Social and environmental levies were introduced for a very important reason: to help fund bill-cutting measures in fuel-poor homes, and develop renewable energy infrastructure. But the way these levies are applied is now working against those vital objectives and disproportionately impacting the


most vulnerable.” The analysis shows that some


low-income households paid more than four times as much of their net income on electricity levies last year than better- off groups. Moving levies off electricity bills and into general taxation would save low-income households between £193 and £360 annually. Levy reform, The MCS Foundation says, would ensure the transition away from gas also means lower bills. In the 2025 Autumn Budget,


Chancellor Reeves announced that 75% of the cost of the Renewables Obligation levy would be funded by the Treasury until 2029. However, further levies are expected to be placed on electricity, driving up the proportion of bills that are made up of levies by a third by 2031. “We need full levy reform


to deliver a fair system that benefits all UK households and incentivises the switch to cleaner heating sources such as heat pumps,” concludes Garry Felgate.


How hybrid heat pumps could cut costs


A new report by Stonehaven highlights the role hybrid heat pumps could play in accelerating UK heat decarbonisation, arguing they can reduce costs, ease pressure on electricity networks, and offer a practical solution where full electrification is not viable. The report, ‘The heat


decarbonisation two-step’, finds hybrid systems are around £2,700 cheaper than standalone heat pumps in nearly a fifth of English homes. It also warns the biggest ‘lock-in’ risk is not hybrid technology itself, but the lack of affordable low- carbon alternatives, which could


benefits, including £830m per year in reinforcement savings, over £21bn in avoided distribution investment, and more than £9bn in reduced consumer charges through to 2050. Sponsored by Cadent, the report


leave households reliant on conventional gas heating for longer. It also highlights wider system


Reform pledges to scrap green grants Devon homes on renewable liquid gas


Reform UK has pledged to scrap government grants that help homeowners install heat pumps, as part of a wider package of cuts to net zero spending which the party claims would save £13 billion a year. The party’s Treasury spokesman Robert Jenrick said a Reform government would abolish the Boiler Upgrade Scheme, which currently provides financial assistance to households switching from gas boilers to heat pumps. Last year saw 31,000 households


access funding for heat pumps or similar low-carbon heating systems, but official statistics reveal that 75% of households that have already received the heat pump grant had an annual income of over £100,000 while more than half (52%) resided in properties with four or more bedrooms.


A similar announcement has


been made by Reform UK Scotland leader Malcolm Offord, who says he will end Scotland’s heat pump and net zero subsidy schemes, which currently see households receive interest-free loans and grants of up to £9,000.


Energy analysts, however, have


warned that such a move would leave British households more exposed to volatile global gas prices. The Energy and Climate Intelligence Unit points out that with North Sea gas reserves declining, a switch to electric heat pumps powered by domestic renewables was the only credible route to reducing dependence on imported gas. “Time and time again we’ve


seen what the UK’s over-reliance on gas for power and heating has done for households and businesses,” says ECIU head of analysis Simon Cran-McGreehin. “Adding to the more than 125,000 heat pumps installed in the UK last year can have significantly more impact on how much foreign gas we have to import than more drilling in the North Sea.”


A housing estate in Exeter has become the first in the UK to switch to a 100% renewable liquid gas blend for home heating. Residents at Seaward Park,


a 19-home estate, switched to bioLPG in December 2025. They are heating their homes exactly as before, but now with up to 80% lower carbon emissions than with conventional LPG. The South West has the highest


proportion of off-grid households in England at around 24%, many of which are in rural areas where properties rely on oil or LPG tanks for heating. As the government considers


the future of home heating, heat pumps are widely promoted as


calls for policy reforms such as expanding Boiler Upgrade Scheme eligibility, aligning gas and electricity network planning, and reforming pricing signals. Drawing on evidence from the Netherlands, it notes hybrid systems can cut gas use by around 75% while improving system flexibility. Download the report using the link below. ◼ phamnews.co.uk/426/14


the primary option. However, impact assessments suggest around one in five UK homes may not be technically suitable for a heat pump, rising to a third once affordability is considered. Ivan Trevor of Flogas Britain,


which supplies the estate, says: “This shows that off-grid homes don’t have to rip out their heating systems to reduce their emissions.”


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