The next quarter century is likely to deliver a significant decline in electricity costs for Britain.
According to the National Energy Systems Operator [Neso], the new independent body overseeing electricity and gas networks, the shift to renewables and away from costly imported oil and gas will help bring market prices down sharply.
The costing estimates, released last Thursday and first reported by the Financial Times, included a number of scenarios, from the UK hitting its 2050 net zero target, to falling short on that goal.
Although this does not necessarily equate to cheaper domestic bills, all of Neso’s transition maps – from fully carbon neutral grids to proportional emissions reductions – led to a big cut in energy-related spend as a share of GDP. Currently, total system spend is around 10% of national income, but this is predicted to drop to 5-6% within the next 25 years. The estimate based on closest ties to the official Downing Street policy, for example, shows a reduction from £350billion to £220billion per year.
However, Neso does acknowledge that in the near-term, the net zero transition does appear more expensive, but this stops being the case around 2045, when two possible net zero pathways become cheaper than the so-called ‘falling behind’ roadmap. The organisation also warned that economic differences between these potential futures were less of an issue than uncertainties around technological developments and the price of resources.