The hidden costs of net zero will keep electricity prices high

By the Editorial Team · Friday, July 10, 2026

Experts warn that transitioning to a net-zero electricity grid will require significantly expanding renewable capacity and infrastructure, driving up costs and keeping electricity prices high throughout the next decade. This increase in expenses may hinder the competitiveness of UK industries compared to countries with cheaper energy sources and raise concerns about the economic and social impacts of the green transition.

Efforts to transition to net-zero emissions are likely to keep electricity prices elevated over the coming decade, according to experts emphasizing the hidden costs associated with renewable energy infrastructure. While renewables such as wind and solar power often promise lower generation costs, the intermittency of these sources necessitates significantly increased capacity and supporting systems, driving up overall expenses.

Sir Dieter Helm, Professor of Economic Policy at the University of Oxford and Fellow in Economics at New College, Oxford, highlighted that meeting peak electricity demand under a largely renewable grid entails building far more capacity than traditional fossil fuel and nuclear systems. For example, if peak demand is around 45 gigawatts (GW) with an additional margin of 15 GW, the existing power model relying on coal, gas, and nuclear might require about 60 GW total capacity. However, to achieve similar reliability with wind and solar, capacity could need to expand to at least 120 GW by 2030, with projections reaching between 250 and 350 GW by the end of the decade to meet rising demand.

This expansion involves not only duplicating generation capacity but also significant investment in network infrastructure, battery storage, and backup systems to counter balance the variability of renewable production. These additional components collectively contribute to a scenario of substantial excess capacity, which translates into higher system-wide costs.

Furthermore, under current government policies, the pricing of renewable electricity—largely fixed through contracts for difference—decouples consumer prices from gas market fluctuations. Thus, even if gas prices remain low or decline gradually, consumers may not see reductions in their electricity bills. Instead, cost relief offered by policymakers may largely involve redistributing expenses among customer groups and taxpayers rather than actual decreases in total costs.

These dynamics carry economic implications beyond household affordability. The higher electricity costs may undermine the competitiveness of domestic industries, especially in comparison with countries like China and the United States. China’s continued reliance on inexpensive coal and the U.S.’s access to low-cost gas and expanding renewable capacity create a growing gap, potentially eroding the manufacturing base in the UK.

Critics argue that, despite the substantial investments and adjustments, this approach does not directly tackle the core challenge posed by climate change. Given the financial pressures and structural changes required, the transition to net zero is proving more complex and costly than initial projections suggested, raising questions about its broader economic and social impact in the near term.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.