Toward a clean, cheaper and more secure energy system

Electrification expands energy security into new areas

Transport and heating remain reliant on fuel imports, and form the majority of household energy expenditure. Energy security can be improved in these areas by building on the Clean Power 2030 Action Plan with electrification.

Electrification of domestic heating cuts imports and bills

Central gas heating means that the majority of households remain reliant on energy imports despite reductions in the power sector. With an increasingly homegrown power supply and more efficient heating technology, electrification of heating presents an opportunity to cut imports as well as costs.

Clean Power 2030 cuts gas power use, but domestic heating remains reliant on imports

Household use of gas is the largest component of UK gas consumption. It overtook power consumption of gas in 2010. The amount of gas used in UK homes has declined by around a third since 2005, due to rising energy costs, energy efficiency measures and regulation mandating more efficient condensing gas boilers. However, because of falling UK offshore gas production, import reliance has increased despite reduction in demand. Domestic heating using gas boilers, as in around 75% of UK homes, is therefore increasingly reliant on imports. A gas boiler installed in 2025 will be reliant on imports for three-quarters of the gas used over its lifetime (78%), compared to only 49% for a gas boiler installed in 2009. 

Electrifying household heating can cut costs as well as imports

Most UK homes use gas for heating, meaning their energy bills are vulnerable to changes in fuel import prices. This was witnessed recently with the energy crisis, during which average household gas costs doubled from £550 to £1,100 between 2021 and 2022. That’s a 100% increase. In comparison, electricity bills increased by 53% over the same period. The Clean Power 2030 Action Plan targets electricity cost reductions, but households could save even more by policies targeting lower heating costs, cutting gas use through electrification. 

A typical household with a gas boiler will spend £640 on heating, over a third of a typical household’s gas and electricity bills. This could be 10% lower if the same home were heated with a heat pump on certain tariffs, however as certain policy costs on electricity prices mean bills are capped at a much higher level than gas, heat pumps are not always competitive. It is estimated that rebalancing policy costs away from electricity bills would encourage electrification by reducing household electricity costs by around £200 per year, in 2024-2025 prices.

Electricity supply is less reliant on imports than direct use of gas, because of the growing share of renewable electricity generation in the UK. Electrifying residential heating, such as switching gas boilers to heat pumps, reduces import reliance for households while cutting the climate impact of home energy use. Fuel imports such as gas and biomass for electricity generation make up 47% of the current energy needs for a heat pump. However, this import reliance is forecast to halve to around 25% under a clean power system in 2030. Switching a home from using a gas boiler to a heat pump reduces gas imports both because a heat pump is over three times more efficient, but also due to the increasingly homegrown renewable electricity system.

In a Clean Power 2030 system, the electricity supply will be half as reliant on imports compared to in 2023, while gas boilers will be increasingly reliant on imports. As a result, heat pumps will use just 1 MWh of imported primary energy, compared to 6.1 MWh of imported gas for a gas boiler providing heating in 2030. In 2030, a heat pump will rely on 83% less imports compared to a gas boiler.

Connecting household heating to a clean power system strengthens energy security by cutting gas imports for heating, building on reducing the power generation fuel imports targeted in the Clean Power 2030 Action Plan.

Shifting away from gas boilers to heat pumps for heating UK homes reduces the country’s reliance on imported energy fuels, reduces overall gas demand and helps stabilise energy costs for households. The UK can build a more resilient, electrified heating system, shielding households from the volatility of global fuel prices.

Transport fuels are a further opportunity to cut costs and imports

Petrol and diesel prices are set on international markets and total transport fuel costs the average UK household more than either gas or electricity. With production in long term decline, a strategic approach is needed to reduce demand and energy bills through electrification.

Transport fuels are the largest part of household energy bills

Oil fuels for transport, such as petrol and diesel, make up the largest component of household expenditure on energy and are highly reliant on fuel imports. Oil prices are set on global markets, and despite demand for transport fuels remaining below pre-pandemic levels, total expenditure has increased. UK households spent £1bn more on transport fuels in 2023 compared with 2019, a 3% increase to a total of £33bn, as average petrol and diesel pump prices increased by 20% over the same period. 

Compared with other energy bills, transport makes up a significant component. Until 2020, half of total household energy bills were spent on transportation motor fuels (i.e. petrol and diesel) although with the rise in other costs, this proportion has decreased to around a third. UK households spend £21 per week on motor fuels, on average. The remainder of total energy bills is spent on gas, electricity and other minor fuels at a total of £21bn across all households in 2023, compared to a total of £33bn on transport fuels.

Imports for transport fuels are forecast to increase

The Covid-19 pandemic created a lasting drop in oil demand for transport, but import reliance is still forecast to increase out to 2030. Demand for petrol and other oil products has risen slowly since the sharp drop during the Covid-19 pandemic, but remains around 12% lower than in 2019. Since 2000, oil demand has fallen by around a quarter (23%) due to reductions in road transport demand, domestic oil use and industry consumption. However, UK offshore oil production is also in long-term decline. During the pandemic, imports made up only 17% of oil demand (2020/21 average) but this proportion has since increased to 44% in 2023 and is projected to rise to 60% by 2030. 

Electrification cuts import reliance for transport fuels by more than half

Electrification of transport presents a significant opportunity to reduce household energy expenditure, as well as reducing fuel imports and cutting emissions. Charging an average-sized electric car can cost between three-quarters and half as much as for an equivalent petrol car. The power to charge an electric vehicle is typically 47% reliant on imports, under a Clean Power 2030 electricity system, this is forecast by NESO to fall to around 20%. Electrification of transport can cut household energy bills, but also overall import reliance. 

Electrification of transport and heating is at an early stage in the UK, but already having an impact. In 2023, there were 1.5 million electric vehicles and 430,000 residential heat pumps in the UK, which were powered with 60% clean electricity. This reduced oil and gas consumption by 14 million barrels of oil equivalent, equivalent to almost two-weeks worth of the UK’s annual net oil and gas imports.