A new analysis suggests that the United Kingdom's pursuit of its Net Zero targets could impose an annual cost of over £500 on households by 2050. The report, originally commissioned by former Conservative energy secretary Claire Coutinho and later completed by the think tank Onward and advisory firm Transpira Energy, contrasts the current Net Zero path with an alternative strategy focused on reducing electricity costs.
The "Cheap Power" strategy, as modeled by Onward, would prioritize less reliance on intermittent renewables by incorporating more nuclear power and some additional gas, while building fewer grid connections for wind and solar farms. This approach, according to the analysis, could make electricity a third cheaper by 2050 and a fifth cheaper by 2035, potentially saving the average household approximately £540 per year compared to the current Net Zero trajectory. This scenario would still result in nearly 80% clean energy.
The report criticizes the government's current approach to the electricity sector as "incoherent," stating that it rushes decarbonization through renewables without fully accounting for the associated system costs, such as grid balancing and extra transmission infrastructure. This, the authors argue, drives up electricity prices, creating a contradiction as consumers are simultaneously encouraged to adopt electric technologies while facing higher electricity costs.
While the analysis was initiated by the previous Conservative government, its findings are being highlighted by the current Conservative party. Kemi Badenoch, a Conservative leader, described the report's findings as a "common-sense" approach and advocated for abandoning the current strategy. She contended that current Net Zero targets have increased energy costs, weakened the industrial base, and increased dependence on energy imports, without sufficiently enhancing resilience to climate change consequences.
The report emerges as the UK government faces decisions on new oil and gas drilling projects, such as the Rosebank and Jackdaw fields. The Prime Minister has expressed a desire to provide financial relief to consumers, including a cut in VAT on electricity bills. However, UK electricity prices remain among the highest globally, exacerbated by international conflicts.
Labour, meanwhile, has defended its commitment to clean energy. Energy Secretary Miatta Fahnbulleh stated that adopting the Conservative approach would "tie Britain to the fossil fuel rollercoaster and keep bills higher for families." She asserted that Labour is investing in clean energy jobs and tax cuts on electricity bills to support households. Labour aims to achieve 95% carbon-free electricity by 2030, a target the Conservatives argue is unachievable. The Net Zero by 2050 goal was initially enshrined into law by the Conservative government under Theresa May in 2019.