How do other countries price energy: Sweden, Germany, France, Spain and the UK?

Most countries use the same basic system for electricity, a market where the last unit needed sets the price, but they differ in what fuels that last unit and how gas is priced against electricity. Historically some governments set electricity prices themselves; this is increasingly rare, and most countries now use liberalised markets.

France shows one extreme. In 2021 gas set the marginal electricity price only 7% of the time there, because nuclear plants usually sit at the margin; in Germany, where coal often does, the figure was 24%. Across the EU it was 36%. In Spain, Ember found power prices above the cost of gas power in 52% of hours in 2021 but only 15% in 2026 to date, a sign the link with gas is weakening.

Heating shows another difference: the electricity-to-gas price ratio. The UK Collaborative Centre for Housing Evidence said Germany's ratio was above 4.0 almost every year from 2012 to 2023, Sweden's had not been above 1.75 for more than a decade, and Switzerland's averaged around 2.0. In 2022 Sweden sold 2,047 heat pumps per 100,000 people, the UK 89. The price ratio is not the only factor, but it frustrates deployment in the UK.

Is there a better market design? The European Commission said the marginal pricing model provides efficiency, transparency and incentives to keep costs as low as possible. Seven EU member states wrote that no satisfactory alternative model had been identified.