The practical point is simple. Britain already gets a large share of its electricity from lower-cost renewables and nuclear, but too much generation is still exposed to wholesale prices set by gas. When gas spikes, electricity can still rise with it. The government’s new package is an attempt to reduce that exposure over time.
Quick answer
- The government announced the package on 21 April 2026.
- It includes a voluntary fixed-price contract route for some existing low-carbon generators.
- It also raises the Electricity Generator Levy rate from 45% to 55%.
- It does not mean the domestic electricity price cap was rewritten overnight.
- It does matter for heat pumps and solar because steadier electricity pricing improves the long-term case for electrification.
What the government announced on 21 April 2026
| Measure | What the official announcement says | Timing |
|---|---|---|
| Voluntary fixed-price contracts | Existing eligible low-carbon generators that are not already on fixed-price contracts will be offered a voluntary long-term route onto steadier pricing. | Announced on 21 April 2026. Government says the route will be introduced later in 2026, with an intended allocation process in 2027. |
| Electricity Generator Levy | The levy rate rises from 45% to 55% so more of the exceptional upside linked to gas-price spikes can be captured. | Presented as immediate action in the announcement. |
| Wider electrification measures | The same package also references easier installation routes for EV charging, solar panels and heat pumps, plus more support for clean power delivery. | Some points are current commitments; others are summer consultations or later delivery steps. |
Why electricity still follows gas
The GOV.UK announcement says about 30% of Britain’s power supply is still exposed to wholesale prices set by gas. It also says the system has improved from gas setting the electricity price around 90% of the time in the early 2020s to around 60% today.
That is the core issue. Renewables already help, but they do not fully shield consumers when a large enough share of the system still clears at gas-linked prices. That is why a gas shock abroad can still show up on UK electricity bills even when more clean generation is already on the system.
What the fixed-price contract route is meant to do
The government’s aim is to bring more existing low-carbon generation onto steadier pricing arrangements rather than leaving that output exposed to gas-linked volatility. The Contracts for Difference system already works on that principle for new low-carbon projects: it gives developers more stable revenue and protects consumers when wholesale prices are high.
The new move extends that logic. It does not make every unit of electricity cheap overnight, but it should reduce how much power remains exposed to gas shocks if the new contracts are taken up at scale.
What has not changed yet
- The market has not been fully rewired in April 2026.
- The new voluntary contract route still has later-2026 delivery work and an intended 2027 allocation process ahead of it.
- The domestic price cap still exists and continues to move with wider market conditions.
- Some related clean-power measures in the same announcement are consultations, not live rule changes today.
Why this matters for heat pumps and solar
Electrification decisions get easier when electricity becomes more stable as well as cleaner. Heat pumps and battery-backed solar systems are judged partly on running-cost confidence, not just on grant support or installation cost.
That is why this policy move matters even before the full contract reform lands. It points in the same direction as the wider heat pump and solar push: make electricity less hostage to fossil-fuel shocks, then let homes and businesses make better use of it.
- Cost of electricity in UK for the current benchmark people are still using in quotes and comparisons.
- BUS changes from April 2026 for the grant and evidence side of the same period.
- Heat pump survey and solar survey for the technical route behind the install decision itself.
What to watch next
| What to watch | Why it matters |
|---|---|
| Later-2026 delivery detail | This is where the voluntary fixed-price route becomes more concrete. |
| 2027 allocation process | This is the point at which the new route starts looking practical rather than only directional. |
| Ofgem price-cap periods | These remain the clearest current household benchmark while the broader reform is still landing in stages. |
| Summer consultations on heat pumps and wider electrification | The same announcement links electricity reform with practical barriers around heat pumps, flats, renters and solar access. |