UK energy costs could be cut by up to 50% by 2050 if the country’s net-zero transition is managed successfully, according to the National Energy System Operator (NESO).
In a new analysis, NESO found that with suitable planning and investment, energy costs as a percentage of the UK’s GDP will decline from 10% today to 5-6% in 25 years.
There are numerous different pathways that the UK can take to move its energy system toward the net-zero goal in the coming decades and NESO says that the cost savings can be realized regardless of which path is chosen.
This is in large part due to all pathways reducing exposure to fossil fuel price spikes. Around £27 billion was spent importing fossil fuels into the UK for power and heating in 2024.
Generating energy from gas-fired power plants already costs 30% more than offshore windfarms and twice as much as solar PV generation (even before taking into account significant efficiency improvements expected for solar over the next 10 years).
The projected cost savings are, of course, highly dependent on a variety of unknown factors including technology costs, consumer behaviours, and policy assumptions over the coming years.
However, NESO’s Director of Strategy & Policy, Claire Dykta, noted that there is potential for outcomes to be even more favourable than their modelling currently suggests.
“Projecting future energy costs is very difficult, but our analysis suggests that Britain could halve energy spending by 2050,” said Dykta.
“Our pathways are designed to help with strategic planning and policy development, and we see potential for costs to be even lower than our models suggest.”
Industrial energy consumers in the UK currently pay more for their electricity than nearly every other country in Europe, and only German domestic consumers face higher energy bills than their UK counterparts.
Over 50% of the UK’s energy comes from renewable sources, with around 26% from gas and the rest generated using nuclear or biomass.
