Britain’s energy revolution is doomed unless we make electricity cheaper

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Ed Hezlet, head of energy at Onward, has explained the electricity crisis facing Britain

The electricity sector is placed front and centre in the decarbonisation debate.

Clean Power 2030 with its target of a 95 per cent clean grid by 2030, takes the headlines. Not only is this target highly unlikely to be achieved, but it misses the bigger picture.

If you look at the breakdown of UK emissions, just 10 per cent come from the electricity sector. UK electricity emissions have fallen by eight per cent since 1990, largely thanks to the growth of renewables and the closure of coal power stations.

That means that other sectors are much more significant. Domestic transport is now 31 per cent of the total and energy use in our buildings (mainly heating) makes up another 20 per cent.

On a combined basis, those two sectors are about five times more important than the electricity sector.

The government wants consumers to electrify their heating and transport, as technologies like heat pumps and electric vehicles are very energy efficient, and use power that is generated from mainly clean sources - like renewables and nuclear.

But there is a big cost problem. Britain has some of the highest electricity prices in the developed world.

In 2024, the UK had the highest industrial electricity prices and second highest household prices (only behind Germany) out of a group of around 25 developed world countries.

Consumers will be more enthusiastic about heat pumps and electric vehicles if they make real savings, but high prices are stopping this from happening.

Look at heat pumps, where the UK has the lowest uptake in Europe, because Britain’s expensive electricity stops consumers from feeling the benefits.

The Climate Change Committee noted that around 52,000 heat pumps were installed in existing homes in 2025 - but this is a drop in the ocean compared to the existing stock of 23 million gas boilers.

Onward's new report makes the case for a cheaper electricity system that could help cut household electricity bills by £200 per year by 2035.

It models an electricity system built with much more firm generation capacity - including nuclear and gas, as well as renewables.

In total, £320bn could be saved over 20 years, with nearly half the savings coming from lower costs in building out electricity networks.

By building power stations close to existing power lines and closer to consumers, major savings are made.

Current grid spending plans are focussed on connecting lots of wind farms to the grid, many of which are located in Scotland.

If the UK can make the electricity system work for consumers, by delivering reliable power at lower prices, then businesses and consumers will want to use more electricity, without being told to do so by the Government.

Over time, the efficiency advantages of electric technologies will start to win out, saving households money and also reducing emissions.

As an example, the report estimates that households could eventually save £300 per year by replacing their gas boiler with a heat pump.

Demand for electrified products could also be boosted by allowing the benefits and not just the costs.

Air-to-air heat pumps can provide cooling in summer as well as warming in winter, but government policy discourages the use of air conditioning in buildings.

Lower electricity prices would also help the competitiveness of UK businesses, and it is vital that the UK stops pricing its industry out of global markets.

Whilst Britain has made progress in reducing emissions, some of this has been achieved by offshoring carbon intensive industries to other parts of the world.

Territorial emissions (the measure upon which net zero targets are based) measure the greenhouse gas emissions within the UK’s border.

On this measure, UK emissions have fallen by just over 50% versus 1990 levels. The government also publishes another metric, consumption emissions, that includes the impact of the emissions from imports and exports.

This measure only fell by 24 per cent between 1990 and 2023, the year for which we have the most recent data. The gap between the two measures suggests that whilst the UK has made progress, some of this progress has been achieved by offshoring our industry.

The UK’s grid is already much cleaner than the global average. Data from Ember puts the global electricity generation mix at one third coal, with another quarter from gas and other fossil fuels.

By contrast, about 27 per cent of the UK’s generation came from gas in 2025 and the last British coal power station closed in 2024.

The Onward report assumes that the share remains below the 2025 level, reaching 23 per cent in 2050.

Focusing on delivering cheap and reliable electricity is a win-win. It can help save money for households, make our business more competitive, and help reduce our emissions too.