New analysis from Net Zero Watch warns that the UK’s Net Zero agenda is pushing up electricity prices and eroding the nation’s competitive edge.
The briefing paper, Fixing the electricity system, reports that “non-commodity costs” — the expenses linked to operating a renewables-heavy power network rather than producing electricity itself — have become the dominant factor behind elevated energy prices. These are the same cost pressures highlighted to Parliament by energy retail leaders in October 2025.
Although Britain pays only average international prices for gas, it now faces the highest industrial electricity costs among developed nations. According to the analysis, these system-management expenses, which are minimal in fossil-fuel-based grids, will continue to escalate as more weather-dependent renewable capacity is deployed.
The study calculates that Net Zero-related costs amount to £17 billion annually and could climb to £30 billion by 2035 under Labour’s “Clean Power 2030” plan to fully decarbonise the electricity system. This would increase the average household’s cost of living by £600 a year, including £200 from higher energy bills.
Energy specialists, including Oxford University’s Professor Sir Dieter Helm, the Tony Blair Institute and Professor Gordon Hughes, formerly of the World Bank, have repeatedly cautioned that Britain’s energy market has become structurally inefficient, with intermittent generation driving up balancing and capacity-market charges.
The paper contends that “cutting subsidies alone will not reduce prices”. It argues that long-term cost reductions require halting further growth in subsidised renewables and shutting the least cost-effective generators.
Andrew Montford, Director of Net Zero Watch, said:
“The British public have been misled by Ed Miliband and Labour. You cannot make power generation cheaper by making it unreliable and inefficient. Until politicians confront the physical and contractual realities of the system they’ve built, the cost of living crisis will only deepen and growth will continue to remain flat. High energy bills will continue to scar our national politics.”
Net Zero Watch is calling on policymakers to:
- Drop attempts to shift costs into general taxation and be fully transparent about what people are paying for
- Cancel the latest wind subsidy auction known as “AR7”
- Put affordability first by prioritising denser and more reliable forms of power generation
- Recognise that the only way to restore cheap electricity is to reduce the capacity of renewables on the grid
