Britain could halve its energy spending by 2050 as decarbonisation cuts costs and shields the economy from fossil fuel shocks.
That is the headline finding from NESO’s new analysis of the Future Energy Scenarios 2025 which lays out three illustrative routes to net zero and the price tags attached.
NESO says energy-related costs fall in every pathway dropping from roughly 10% of GDP today to around 5-6% by mid-century even as demand rises due to population growth, economic expansion and power-hungry data centres.
The reason is simple. Spending shifts from imported fossil fuels to homegrown renewables, stronger networks and efficient electric heating which cut operating costs and create local jobs.
The report also shows just how much a net zero system protects the country.
The 2022 gas crisis added 1.8% of GDP to energy costs. An equivalent shock in the Holistic Transition pathway in 2050 would add only 0.3% of GDP.
The analysis compares three pathways with different balances of electrification, hydrogen, bioenergy and consumer behaviour. They are not optimised for cost so the final mix could look different as policy and investment choices evolve.
When carbon costs are included the Holistic Transition pathway is the lowest cost option over 2025-2050 and delivers savings beyond 2050.
Ignore carbon costs and the slower Falling Behind pathway appears cheaper saving roughly 0.4% of GDP a year on average to 2050.
It would then face higher long-term costs and forfeit the economic and health benefits tied to faster decarbonisation.
NESO stresses the numbers are indicative given uncertainties and differing assumptions. The point is not precision but direction and the direction is clear.
Claire Dykta, Director of Strategy and Policy at NESO, said: “Projecting future energy costs is notoriously difficult but our analysis suggests that Britain could halve the share of spending related to energy by 2050.
“Our analysis also shows that we would be less exposed to energy price volatility under a decarbonised energy system reducing the economic impact of a spike in prices as we saw in 2022.”
NESO says its scenarios are designed to support strategic planning and identify where costs could fall even further as technology and markets mature.
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