Net Zero Plans to Cost Households and Businesses £12.7bn a Year by 2030

Strategic Insights -

The government's net zero plans could result in a £12.7bn-a-year bill to cover the cost of switching off wind turbines and solar farms, according to a new report. The National Energy System Operator (NESO) has warned that the cost of paying energy firms to shut down renewables could surge by more than fivefold by the end of the decade. This increase could come as a "slap in the face to hard-pressed consumers struggling to pay their energy bills," according to critics.

Key Takeaways:

  • The National Energy System Operator (NESO) has warned that the cost of paying energy firms to shut down renewables could surge by more than fivefold by 2030, reaching £12.7bn a year.
  • The cost of constraint payments could peak in 2031 if the government fails to force through major upgrades to the grid, such as new pylon routes, over the next five years.
  • The NESO projects a surge in total rebalancing costs, including constraint costs, that taxpayers will face to fund the switch to net zero, which could rise by £8bn a year.
  • The cheapest option for households is to abandon plans to phase out gas use and petrol cars, which would result in total rebalancing costs rising only slightly to just over £3bn a year at the end of the decade.
  • The operator expects payouts to fall back after 2030, but only in the counterfactual scenario would they drop below current levels by 2035.

Statistics:

  • £12.7bn: The projected constraint costs in 2030 if no further network reinforcement takes place.
  • £2.5bn: The current annual constraint costs.
  • £8bn: The projected increase in total rebalancing costs, including constraint costs, that taxpayers will face to fund the switch to net zero.
  • £3bn: The total rebalancing costs in the counterfactual scenario where Mr Miliband abandons plans to phase out gas use and petrol cars.
  • £700m: The amount already paid in constraint costs this year.
  • £250m: The increase in constraint costs compared to the same time last year.

Sources:

  • NESO report
  • The Telegraph
  • Octopus Energy
  • Andy Buchanan/AFP
  • JUSTIN TALLIS/AFP
  • DANIEL LEAL/AFP