Climate change

Long Read: The Cost of Climate Change – The Rush to Net Zero by 2050, the Renewables Dilemma & Adapting to the New Normal

The choices facing politicians are stark... If we can't, on our own as a country, stop global warming, then politicians have to realise we have to adapt to it.

The Cost of Climate Change – The Rush to Net Zero by 2050 & the Renewables Dilemma

By Iain Dale and Jerry Owston

 

Authors’ note

After a phone-in in July, I was contacted by one of my listeners, who had phoned into the show, Jerry Owston. Jerry is no ordinary caller. He is a retired UK nuclear and power station engineer with 35 years in the electricity industry and is a public energy sector commentator. What he sent me was fascinating, and with his agreement, I have incorporated it into the 7,000 words which follow. As you will see below, AI has been used, especially in the last section, and to research some of the other figures mentioned, and these statistics have been verified so far as is possible. Apologies if some of the tabulation is at first sight unclear. I have yet to master how to tables and they don’t copy across from the Word doc very well. If you notice and factual errors, please do let us know and we will correct them.

Over the last few weeks on my radio show, and on the WHERE POLITICS MEETS HISTORY podcast, we have talked a lot about the weather, wildfires and climate change. My podcast partner, Tessa Dunlop, professes to suffer from ‘climate anxiety’, which is apparently a predominantly Gen Z phenomenon. In some ways, we shouldn’t be surprised given the apocalyptic predictions made by many scientists and politicians. But are they right? Are we all going to hell in a handcart, and if so, I guess we should be looking at how we are going to be resilient against the inevitable temperatures which are going to affect us in the coming years. The truth is that this is something our government can prepare for and do something about. What we can do very little about is influence the rate of global warming that is taking place, given we contribute only 0.81% of global emissions. If the major polluters. In 2024 these were the Top Ten Most Carbon Polluting Countries by percentage of world carbon emissions.

1 China 33.12%

2 United States 11.69%

3 India 7.96%

4 Russia 5.07%

5 Japan 2.45%

6 Iran 2.09%

7 Indonesia 2.05%

8 Saudi Arabia 1.65%

9 South Korea 1.48%

10 Germany 1.46%

(Source: Global Carbon Project)

Britain lies in 17th place. In 2010 Britain was in 10th place. That means Britain’s annual territorial CO₂ emissions have fallen by roughly 39% between 2010 and 2024, from around 510 million tonnes to 313 million tonnes. The figures come from the Global Carbon Budget 2025, processed by Our World in Data. In 1990, Britain was 7th in the world for annual territorial CO₂ emissions from fossil fuels and industry.

It emitted roughly 600 million tonnes of CO₂, equivalent to about 2.6% of global emissions.

Britain has a proud record here. We’ve fallen down the league table faster than any other major country. In Europe, we are second only to Sweden in the amount we have cut our carbon emissions since 1990. Why does no one talk about this? We are constantly made to feel that we are one of the most sinful countries in the world in this area, yet successive governments of all colours have been incredibly successful.

The two big polluters in the world are China and the USA. Until they pull their weight, very little will change.

China may have increased its renewables capacity, but it continues to build coal fired power stations at a rate of approximately two a week. But that doesn’t tell the full story. If China was to meet climate challenges then it would be reducing, not increasing its coal fired capacity. Look at the 2025 figure in this table.

New coal-fired power capacity commissioned in China

Year/New capacity

2010 53.0 GW

2011 60.3 GW

2012 48.4 GW

2013 51.7 GW

2014 35.6 GW

2015 49.0 GW

2016 49.4 GW

2017 39.5 GW

2018 33.5 GW

2019 48.9 GW

2020 38.4 GW

2021 26 GW

2022 27 GW

2023 50 GW

2024 30.5 GW

2025 78.1 GW

Source: Global Energy Monitor’s Global Coal Plant Tracker.

The recent acceleration is striking. China commissioned 30.5 GW in 2024, representing about 70% of all new coal capacity worldwide that year. In 2025 it jumped to 78.1 GW, China’s highest annual commissioning figure in a decade.

There is one bright spot in this. China’s new generating capacity during 2025 was approximately.:

Coal: 78 GW
Wind: 119 GW
Solar: 315 GW

That means China installed about 5.6 times as much new wind + solar capacity as new coal capacity in that year.

For some reason – and we can all speculate what this might be - the environmental movement seems to delight in giving China a free pass on climate change, pointing to the fact that China is going big on renewables. That is true, with renewables accounting for 7% of China’s energy needs in 2010, and 17.5% in 2024. In Britain the 2010 figure was 3.4% and in 2024 21.3%. France has increased from 8.4% to 16.5% over the same period, but Germany has outperformed everyone with an increase from 9.9% in 2010 to 23.9% in 2024. By contrast, the USA has only increased from 6.2% in 2010 to 12% in 2024.

1 🇮🇸 Iceland 80.50%

2 🇳🇴 Norway 71.81%

3 🇸🇪 Sweden 51.32%

4 🇧🇷 Brazil 49.62%

5 🇦🇹 Austria 43.35%

6 🇳🇿 New Zealand 42.55%

7 🇩🇰 Denmark 41.72%

8 🇨🇭 Switzerland 39.87%

9 🇵🇹 Portugal 39.74%

10 🇫🇮 Finland 38.89%

— Germany 23.97%

— UK 21.29%

— China 17.47%

— France 16.47%

— USA 12.05%

Source: Energy Institute’s Statistical Review of World Energy 2025, processed by Our World in Data. NB The measure uses the substitution method for calculating primary energy. Renewables include hydro, wind, solar, geothermal, modern bioenergy, wave and tidal.

One particularly interesting result is Brazil: almost half of its total energy needs are renewable, not simply its electricity. That’s largely a combination of hydroelectricity and its substantial bioenergy/biofuels sector.

Much of our progress in this area is because the Coalition government followed by those of Cameron, May and Johnson all made it a priority. Lest we forget it was Theresa May’s final act to get the Net Zero by 2050 act through parliament. Ed Milband, as energy and climate change minister under Keir Starmer continued the policy and doubled down on it. His successor, Miatta Fahnbulleh, is said to be Ed Miliband on steroids, yet Andy Burnham gives every impression that he is not so keen and regards economic growth as just as important as Net Zero by 2050 targets. This is an important choice. It’s not a zero sum game, but do we, as Kemi Badenoch suggests, believe that 2050 is an arbitrary target and we should ditch it, or do we take the Milband/Fahnbulleh take, that nothing is more important than achieving this target.

Kemi Badenoch has taken some flak for announcing that all Conservative candidates at the next election will have to sign up to ditching the Net Zero by 2050 target. She’s not saying climate change isn’t happening, or that we shouldn’t continue to make every effort to move towards renewables, but the 2050 date threatens to affect the economy in a catastrophic way. Frankly, it already is, as we shall see below.

In terms of offshore wind turbines, Britain is the European market leader.

Rank/Country

Operational offshore turbines

1 🇬🇧 United Kingdom 2,766

2 🇩🇪 Germany 1,639

3 🇩🇰 Denmark 672

4 🇳🇱 Netherlands 670

5 🇧🇪 Belgium 399

6 🇫🇷 France 200+

7 🇸🇪 Sweden 80

8 🇫🇮 Finland 19

9 🇳🇴 Norway 10

10 🇮🇹 Italy 10

At 31 December 2024 the Crown Estate’s UK Offshore Wind Report 2024 recorded 2,766 operational turbines across 45 operational wind farms, with 14.7 GW of capacity.

Germany had 1,639 operational offshore turbines, with 9.22 GW of capacity at the same point.

There is an even more striking comparison if we look at offshore generating capacity rather than number of turbines:

UK — 14.7 GW
Germany — 9.2 GW
Netherlands — 4.7+ GW
Denmark — 2.7 GW
Belgium — 2.3 GW

That is arguably the better measure, because modern turbines are vastly more powerful than older ones. For example, the new offshore turbines connected in Britain during 2024 averaged 12.7 MW each, compared with 7.6 MW for new French turbines.

In worldwide terms, Britain is in second place to China, which has somewhere between 6,000 and 7,000 offshore turbines.

However, the picture is very different when you look at onshore wind on its own. These are the numbers of operational wind turbines in 2024.

1 🇩🇪 Germany 28,766

2 🇪🇸 Spain 22,000

3 🇬🇧 United Kingdom 9,200

4 🇫🇷 France 8,500–9,000

5 🇮🇹 Italy 7,500

6 🇩🇰 Denmark 6,312

7 🇸🇪 Sweden 5,500

8🇵🇱 Poland 4,800

9 🇵🇹 Portugal 2,879

10 🇳🇱 Netherlands 2,517

Obviously, you have to take into account land mass, but even so, the figures are lower than you would expect them to be. The reason is that our planning system mitigates against onshore wind, although the Labour government is changing that. I’ve always advocated offshore as opposed to onshore because there is another sort of pollution that no one ever talks about. When I was at school we were taught that there were three sorts of pollution – air, water and visual. The latter never gets talked about by today’s environmentalists. At the more zealous end of the spectrum they are only too happy to see wind turbines pollute the countryside of the Scottish Highlands of Yorkshire Dales. Onshore wind has its place, but not if they are built in areas of beauty. Of course there are people who think wind turbines are things of beauty. I am not one of them.Top of Form

Ed Miliband was very keen on building new wind turbines in this country – a worthy aspiration indeed. Who wouldn’t want to encourage British industry and manufacturing? In July 2025, he said: “Every turbine we build helps protect families, businesses and the public finances from future fossil fuel shocks.” A month earlier he announced a £1 billon supply chain initiative to encourage British companies to manufacture the various component parts of wind turbine.Bottom of Form

The question remains, just how feasible would it be for us to build and manufacture all parts of a wind turbine here in the UK?

For a fair comparison, it’s best to compare modern onshore wind turbines in the 4–6 MW class, as these are widely manufactured around the world. Prices vary because of labour costs, steel prices, local content requirements, shipping, financing, and government support.

Manufacturing country/region-Major manufacturers-Typical turbine price (USD/kW)-Approx. cost for a 5 MW turbine

China - Goldwind, Envision Energy, MingYang Smart Energy

$200–450, 1.0–2.3 million

India - Suzlon Energy, Inox Wind

$500–800, $2.5–4.0 million

Germany - Nordex, Enercon

$850–1,100, $4.3–5.5 million

Denmark Vestas

$900–1,200, $4.5–6.0 million

Spain - Siemens Gamesa

$850–1,150, $4.3–5.8 million

United States - GE Vernova

$900–1,300, $4.5–6.5 million

Türkiye - Local licensed manufacturers

$700–950, $3.5–4.8 million

Brazil - Local assembly under licence

$700–1,000, $3.5–5.0 million

Why the differences?

China has by far the lowest manufacturing costs due to:

  • very high production volumes,

  • lower labour costs,

  • integrated domestic supply chains,

  • extensive government support, and

  • intense competition among manufacturers.

Recent industry data suggests Chinese turbines can be 20–40% cheaper than equivalent European turbines in export markets, and prices inside China can be dramatically lower still.

Manufacturing cost ranking (lowest to highest)

1. 🇨🇳 China

2. 🇮🇳 India

3. 🇹🇷 Türkiye

4. 🇧🇷 Brazil

5. 🇩🇪 Germany

6. 🇪🇸 Spain

7. 🇩🇰 Denmark

8. 🇺🇸 United States

Notes

  • These figures are for the turbine itself (tower, nacelle, blades, generator, controls).

  • They do not include foundations, cranes, roads, electrical infrastructure, grid connection, transport, or installation, which often double the overall project cost.

  • Offshore turbines are significantly more expensive. A 15 MW offshore turbine from European manufacturers may cost US$15–25 million before installation, while comparable Chinese offshore turbines are typically 25–50% less expensive.

So when you look at production costs for say a 5MW wind turbine the cost is about a THIRD of production costs in Europe. Even AI says that they are between 20-40% cheaper and many say they are better quality than those made in Europe and I know Siemens Gamesa the German/Spanish outfit had a lot of design problems with gearboxes.

If we therefore made them here and were forced to install them here we’d likely be more expensive again than Siemens Gamesa so likely about double the costs of China at least.

That would mean given the prices settled in AR7 by Ed Milliband was.

Technology/AR7 Clearing Strike Price (2024 money)/

Onshore wind

£72.24/MWh

Fixed-bottom offshore wind

£93–94/MWh

Floating offshore wind = £196/MWH

It estimated that a UK manufactured wind turbine cost twice as much as one made in China it would add about 26-35% to the cost of a wind farm installation.

If we go back a couple of years to AR5 under the Tories they set a price for bids at £44/MWH for wind and solar and got ZERO bids, AR6 was able to get offshore wind at about £76/MWH so as you can see its not getting cheaper its rapidly getting more expensive.

On top of that, when you look at cost breakdowns in the latest DEZNEZ report here are the prices for gas generation depending on load factor.

(Load factor = the % of practical maximum output a plant can do running at maximum output all year so if it was 1000MW plant if it ran on average at 50% output, 500MW over the year the load factor would be 50%)

CCGT 5% load factor = £430/MWH

CCGT 30% load factor = £150/MWH

CCGT 93% load factor = £110/MWH

Now that shows you how gas generation gets more expensive the less you use it due to renewables because the fixed costs like wages, rates, water rates, insurance etc has to be paid for as the generation lowers.

Now those prices are a 2025 prices where as renewables are often quoted at 2012 prices to levelise the costs but it’s not the actual cost as you have to add inflation and the fact that interest rates are now over 5% whereas in 2012 they were essentially zero.

Add on top of that in 2024 DEZNEZ quoted new CCGT generation at about £114/MWH but £60 of that was Carbon tax which is more than half the price, and would at least have doubled the cost of gas generation again

Remove the carbon tax and CCGT is about 40% cheaper than current renewables contracts under AR7 but everyone is paying the gas price which is effectively doubled by the carbon tax.

Now add the costs of the fact renewables are walking CCGT off the grid and adding costs to CCGT generation and CCGT is required for stability on the grid so the renewables is driving up the gas cost and will already have

So remove the carbon tax and the fact that renewables are driving up gas generation costs and you could at least halve the wholesale price and probably because it would generate more would reduce prices even further.

Then you have to add the “system costs” to renewables which will require five times the grid infrastructure to distribute it where costs have already risen in two years according to NESO from 58bn to 89bn and then add costs of grid batteries etc and all those costs can be avoided.

And that’s why renewables are driving up the price of both the wholesale cost of generation and the distribution system costs at the same time. Many would claim this is economic madness.

What we are living through is a time when adherance to an ideology is everything. The row about Jackdaw and Rosebank is a perfect example of this, where zealotry trumps fact. These North Sea fields are ripe for development, with very little climate consequence. They would marginally strengthen the UK’s energy security, existing jobs and apprenticeships would be protected and new ones created and there would be billions of pounds of tax revenues at a time when we desperately need such monies to fund public services and service our burgeoning debt. Ed Miliband has described the prospect of these licenses being confirmed as “economic vandalism”. A good soundbite, but not based on fact. If we are interested in facts, we have to surely acknowledge that the climate emissions of importing yet more LNG from the other side of the world, is far more damaging to the climate than the opening of Jackdaw. Sure, oil is more marginal that gas from both a cost and emissions point of view, but it is worth pointing out how bad LNG really is against pipeline gas.

The most useful current UK data comes from the North Sea Transition Authority (NSTA), which assessed the 2024 UK gas supply.

UK comparison

Pipeline gas imports/LNG imports

Typical UK source: Mainly Norway/US, Qatar and others

Supply-chain emissions: ~8 kg CO₂e/boe/

Relative emissions: 1×, ~10.6×

LNG emissions: ~85 kg CO₂e/boe/

Relative emissions ratio 1 – 10.6x

Main additional emissions: Production + pipeline transport/Liquefaction + shipping + regasification

Cost: Generally lower/Generally higher

On top of that North Sea gas would be 14% cheaper than LNG and creates jobs here, tax revenues and of course more security of supply and balance of payments.In other words North Sea gas is a “no brainer” on every front.

It is worth pointing out that while we fixate on the North Sea, under Biden the USA licensed an area of the gulf of Mexico the size of Italy, as evidenced HERE in The Guardian in 2023.

Case closed, surely.

Certainly not, say the climate campaigners who can’t deny the logic of the position, but witter on about “sending important signals.” You only do that when you’ve lost the argument. In essence, their argument can be summed up as “Donald Trump is in favour of the UK opening new oil and gas fields, so therefore we’re against it.” Puerile, facile and virtue signalling.

In this article we have concentrated on the arguments surrounding the expansion of wind power, bur there are, of course, other forms of renewable energy - wave power, tidal power and solar.

At the moment wind provides roughly 29% of Britain's electricity, but only around 4–5% of Britain's total energy requirement. Solar provides roughly 4–5% of electricity but less than 1% of total energy. Wave power is currently negligible.

Many of us have struggled to understand why wave power generation has never really taken off in this country, given the UK has more than 12,500 miles of coastline. However, in terms of electricity generation, we are number 4 in the league table, behind Spain, Portugal and Italy.

The UK is much more important in wave technology and development than the bare statistics suggest. Scotland's European Marine Energy Centre in Orkney is one of the world's leading wave and tidal test centres. A 5 MW CorPower wave array is due to be deployed there in 2029 and will be Britain's largest wave-energy project.

There was one small tidal scheme commissioned in AR 7 designation. This is from Gov.uk…

The tidal projects were subsequently awarded under AR7a, the supplementary allocation round. The Government’s AR7 framework set the administrative strike price for tidal stream at £371/MWh (2024 prices) and wave at £386/MWh.

It goes on to say

In AR7a, a number of small tidal-stream projects received CfDs. One notable group is the Morlаis Tidal Tech projects involving Orbital Marine and HydroWing.

For example:

Project/Technology/Capacity/Strike price

Morlаis Tidal Tech – Orbital Marine: Tidal stream/3 MW/£265/MWh

Morlаis Tidal Tech – HydroWing: Tidal stream/10 MW/£265/MWh

The AR7a results show £265/MWh in 2024 prices for these projects, with delivery from 2028/29–2029/30.

These are tiny in size and still pretty expensive. Bearing in mind that we are talking about gas being “expensive” this gives you a ballpark for the staggering costs of wave and tidal which is why we don’t commission them. Tidal technology is fairly well developed technology but wave power has been going since the 1970s and never been proven for large scale sea deployment.

In theory the UK’s wave activity is enough to provide 20% of our energy needs, yet only contributes 0.01%. Why? Largely because the technology is so expensive and there is no wave or tidal equivalent of a wind turbine. In addition, much of the best wave activity is around the Scottish coast and islands, which means grid connections are more difficult and commensurately more expensive. The private sector has been less willing to invest the huge sums that would be required, given the uncertainty of a return on that investment, and governments have been unwilling to subsidise such projects or underwrite the risk. While large sums have been spent on research and development, there is no obvious route to market.

Large scale tidal or lagoon schemes have invariably failed because of cost. Or perhaps more accurately, cost versus reward in terms of energy generation. The Swansea Bay scheme and the Severn Barrage are two obvious examples. The Severn has the second-highest tidal range in the world, and a barrage linking Cardiff and Weston Super Mare could produce a very substantial quantity of electricity. Various schemes have been floated over the years, but would have cost up to £34 billion. That wasn’t the only reason the schemes have never got off the ground. There would have been significant environmental damage plus the operational effects on various ports on the Severn and the major port of Bristol.

The Swansea Bay Tidal Lagoon Scheme received planning permission in 2015, but Theresa May’s government killed it three years later, largely due to the £1.4 billion cost. It would have contributed only 0.15% of UK power generation and the same amount of power produced by wind turbines would have cost less than a third of that amount. Decision made.

We need to understand that while wind and sun are free, they impose huge system costs which adds more to the generation and system cost as a result and why energy prices will continue to get more expensive unless the grid is 100% renewables with no fossil fuel generation at all. (Technically possible but the costs would be unbelievable).

Now, bearing in mind that we are talking about gas being “expensive” this gives you a ballpark for the staggering costs of wave and tidal which is why we don’t commission them, tidal technology is fairly well developed technology but wave power has been going since the 70’s and never been proven for large scale sea deployment.

Starmer and Milliband had to reluctantly admit that they could not get to 100% and that we would always need some back up generation, so they reduced the target from 100% to 95% which was an admission of reality.

The key question in this debate is:- If we get a blocking high in the middle of winter when solar is less than 2% of generation and wind is virtually zero the effect of a blocking high is that temperatures plummet and electricity demand soars. So with Nuclear about 10% of winter demand (and likely to be about 3% by 2030) just 2% met by solar, and for argument’s sake 5% by wind in those conditions that’s only 17% of peak winter demand and add in biomass might get you to 24%

Where is the other 76% going to come from?

(Note in Feb 2010 we had a blocking high that lasted 25 days, temperatures never got above -6C in the north and demand was at record highs for the last 20 years)

They may be able to import some of that, but with a winter peak about 55GW and at most about 10GW of interconnectors to Europe would only add 20% at full capacity and blocking highs usually mean that they will be suffering the same as well and may have little or nothing to export.

The answer of course is you would have to keep a huge fleet of gas fired power stations shut down most of the year to then fire up to meet that demand in mid winter in such a blocking high, and who is bearing the cost of having near enough 100% back up for renewables in gas fired power stations sitting doing nothing most of the time? That will be going on our bills.

In fact, there was an Energy select committee inquiry about 9 months ago, in which four of the top energy industry CEO’s recommended unanimously to the committee that they would have to take gas generation into state control because they would simply no longer be commercial other than by charging ridiculous prices to cover all the costs of remaining shut down most of the year (which to a degree is already happening).

However, you will have noticed the £150 off energy bills that the government is taking into general taxation, but that doesn’t mean it doesn’t exist, it just means your tax bill goes up to lower your energy bill and will go up by more than £150 because you and I will be subsiding all the households that can’t afford it and don’t pay tax so it would likely add £250 or more to your bill to get £150 off.

They are trying to “hide” these costs now, but they will still be there either on bills or in taxation. Just because they are taking it from a different pocket doesn’t mean you aren’t paying for it. So that means that both business and personal taxes will go up to pay for these costs and as it gets more expensive, more people cannot afford and therefore require subsidies so those who do pay will increasingly pay more and more either in bills and taxes to pay for it and subsidise more and more people.

The result is higher bills, higher taxes and of course more heavy industry either shutting down or relocating. Didn’t Burnham say that he wanted to reindustrialise the north? It’s difficult to see how he’s going to do that with renewables.

We asked Chat GPT to model various different electricity market assumptions and what their effect would be such as removing carbon pricing and green levies, introducing more modern gas and coal plants etc against the current press for renewables.

As a final question we asked it to model over 2010 - 2026 what the ideal energy mix should be to minimise retail energy prices, this is fascinating, it says that the ideal mix if you forget net zero would only be 2% renewables. It would have reduced retail prices today from 27p/Kwh to just 15p/Kwh or a 45% reduction in retail energy prices.

AFTERWORD

In our discussion about this subject, Jerry sent me what follows below. Given AI is being used a lot in this area, and even though I remain sceptical about its application here, I thought I would include this as I think it throws up some interesting points. But it needs to be read in the full knowledge that some of its assumptions and predictions are not easily verifiable. Over to Jerry…

Obviously I don’t know how it modelled it all and there would have to be some detailed investigation of its computation but as I suspected government net zero interference in electricity production has very nearly doubled our prices (Chat output below)

Q - Out of curiosity, if I asked you to give me a power source mix of your choice to minimise retail electricity prices, what would that be over the period given previous assumptions of no taxes or artificial charges on any generation source?

This is a fascinating optimisation problem because you’ve deliberately stripped away policy distortions (carbon pricing, renewable subsidies, technology mandates) and asked for the lowest retail electricity price, not the lowest emissions.

Under those assumptions, my objective function would be:

  • Minimise total lifetime system cost (£/MWh delivered to consumers).

  • Maintain UK reliability (e.g. ≥15% reserve margin).

  • Use commercially available technology from each year (2010–2025), not speculative future technologies.

  • Ignore externalities such as climate damages, air quality costs, or security-of-supply premiums unless they directly affect electricity costs.

My optimum mix

I would not choose 100% gas, 100% coal, or 100% renewables. Fuel price volatility is too high in the first two cases, and capital plus integration costs are too high in the third.

Instead I’d choose something like this by annual energy production:

Technology/Share

Nuclear 28%

Modern CCGT 32%

Modern dual-reheat coal 28%

Biomass 5%

Hydro 5%

Wind & solar 2%

The 2% wind/solar isn’t for emissions—it’s because there are locations where they can be very inexpensive and reduce fuel burn without materially increasing balancing costs.

Installed capacity

Because dispatchable generation doesn’t require large overbuild:

Technology/Capacity

Nuclear 18 GW

Gas 40 GW

Coal 35 GW

Hydro 4 GW

Biomass 5 GW

Wind/Solar 8 GW

Reserve margin: ≈15% above winter peak demand.

Why not more nuclear?

Nuclear has:

  • low fuel costs,

  • excellent reliability,

  • long life.

But new nuclear has high capital costs and long construction times.

Over 2010–2025 it probably wasn’t the cheapest technology for reducing retail prices because of financing costs.

Existing nuclear should certainly remain.

Why still use coal?

Without carbon pricing:

Coal is surprisingly competitive.

Modern Chinese dual-reheat coal stations have:

  • very high efficiencies,

  • low fuel costs,

  • relatively low capital costs.

They become an excellent hedge against gas price spikes.

Why not 100% coal?

Because gas plants offer:

  • lower capital costs,

  • faster response,

  • lower maintenance,

  • better part-load efficiency,

  • lower fuel consumption per MWh.

Gas complements coal well.

Why almost no renewables?

Under your assumptions:

Removing:

  • carbon pricing,

  • renewable subsidies,

  • renewable mandates,

means renewables have to compete purely on system cost.

Over 2010–2025 they would still require:

  • balancing,

  • transmission reinforcement,

  • reserve generation,

  • curtailment,

  • constraint payments.

Even if individual wind farms have low generation costs, those additional system costs mean they are unlikely to minimise retail prices across the whole period in this counterfactual.

Estimated retail prices

This would probably produce something like:

Year/Actual/My optimum

2010 13.01 11.3

2012 14.0 11.5

2014 15.0 11.8

2016 15.5 12.0

2018 17.0 12.7

2020 17.0 12.8

2022 34.0 18.0

2023 28.0 16.0

2024 26.0 15.0

2025 27.0 15.0

Average:

  • Actual: about 20 p/kWh

  • Counterfactual: about 13.5–14 p/kWh

Why this isn’t the globally optimal answer

If you changed the objective to:

  • minimise CO₂,

  • minimise imported fuel,

  • minimise pollution,

  • maximise UK employment,

  • minimise long-term climate risk,

I would choose a very different mix.

Likewise, if you extended the time horizon to 2050 instead of 2025, the answer could also change because:

  • renewable technology costs have fallen substantially over time,

  • battery storage has become cheaper,

  • and the economics of advanced nuclear, long-duration storage, or other technologies may differ from those prevailing across 2010–2025.

So this answer is specific to the assumptions you’ve defined: minimising retail electricity prices over 2010–2025 with no carbon pricing, no renewable subsidies, commercially available technologies, and without assigning costs to environmental externalities.

One final observation: if I were designing a system for lowest cost and resilience, rather than absolute lowest price, I would probably add 10–15 GW of pumped storage and compressed-air energy storage where geographically feasible. These technologies can arbitrage daily price differences and provide reserve services, potentially allowing a smaller thermal fleet and reducing operating costs. They are relatively inexpensive per MWh delivered over their lifetimes and improve system flexibility even in a predominantly thermal system.

CONCLUSION FROM JERRY

Much of this debate comes down to finding the truth, and on that we should adopt the court definition “The truth, the whole truth and nothing but the truth”. The problem in these debates is that politicians tend to use selective truth that favours their arguments and ignore those that are against their argument.

This is prevalent in Labour who big up that renewables are free and it cuts dependence on fossil fuels which are, as they say, internationally priced. They are “cheap” at source (though that’s because they have loaded gas with taxes and prevent them generating at an economic level which drives up the price when they have to generate so they can meet the fixed costs on reduced generation)

The “true cost” of any fuel source is everything that is required to make it work in the system, what’s known as the “generation cost” which is

Cost of fuel + cost build + cost of decommissioning + maintenance costs + fixed costs (Rates, water rates, staff etc) = Generation costs

But the costs we pay are those generation costs + system costs.

System costs = Cost of the grid build, + cost of maintenance, costs of curtailment (unable to transmit due to bottlenecks) + costs of management (Cost of system essential characteristics like inertia, reactive load management and voltage support which keep the system stable.

The problem with renewables is all the additional system costs renewables impose directly as a result of renewables

1) It drives up the cost of fossil fuel generation, particularly gas, gas sets the price most of the time so more renewables mean higher prices unless the merit order system is changed

2) With a Dispatchable (= capable of providing power on demand to grid) generation there is very little need for storage and you have high load factors which minimises the total number of generating assets you need to build.

3) There is very little need for storage, hydro plants are not actually power stations they are really storage taking excess power off the grid and providing a fast response capability but net they consume more power than they generate.

4) The addition of grid batteries or more hydro is because renewables are intermittent, they all require grid cabling and therefore are all costs directly attributable to renewables.

5) The estimate to get the renewables into the grid, we will require 5 times the amount of grid cabling and transformers which was recently put at 89bn (up from 58bn two years ago) and of course with 5 times the kit it will require 5 times the maintenance costs, all attributable to renewables.

6) To keep the system stable with frequency regulating intertia that comes from gas and nuclear stations that will have to be replaced and simulated by highly expensive power electronics, as will reactive load management and localised grid voltage support. All those costs are directly attributable to renewables.

7) The big question which no one can solve is how much renewables do you need? because its not firm power you don’t know what you will get at any point in time. Its output over a year may be 40-50% of rated output, so do you need twice as much as demand? If we get a very bad winter we may need 3 or 4 times normal demand to cover peak demand but most of it will sit idle most of the year? All that is an additional asset system cost attributable to renewables.

8) The killer is the “Dunkleflaute” where you get a winter blocking high, very little wind, there’s almost no solar. These blocking highs come around most years and can last from a few days (possibly manageable with renewables) to upto 3 weeks (Feb 2010 a classic case) which cannot be handled by renewables or battery storage as demand remains very high and grid batteries at the moment would last minutes. Therefore you would need to have a fleet of gas fired power stations sitting idle all year to cover than eventuality otherwise thousands would die, another “system” cost you’d have to bear attributable to renewables.

So while renewables may (artificially) look cheap at the generating level what consumers and businesses pay is the “entire system cost” and the savings (if there is any on generation) are massively outweighed by the consequential system costs they impose to accommodate them.

Hence why our bills keep going up and up, because you cannot hide those system costs imposed by renewables and government imposed system distortions.

Here’s the real kicker, try having a read of this from Fuse Energy - NESO engineers warn: UK electricity system ‘out of control’

https://www.fuseenergy.com/news/uk-electricity-grid-control

We have tried to hit on the nub of the problem - that renewables are going to be more expensive, and we have highlighted the key issues being dodged by politicians namely:-

1. That its almost impossible to calculate the amount of renewable generation you actually need to get close to or meet a predicted peak winter demand. If you do build out to that extent with much higher grid infrastructure costs as a result what do you do with the excess power in the autumn and spring (summer was once a time of very low demand but this summer looking at electricity prices demand has been high and prices during heat waves regularly over £100/MWH and hitting peaks of £226/MWH in the evenings and amazingly last week over £100/MWH at 3am when its often close to zero on very low demand) That tells us the system is now likely to be stretched in summers going forward. Cost is heavily related to the amount of “kit” you need. If it’s sitting idle you have to pay curtailment costs which keep going up with the excess and even AI struggled to come out with any logic for an optimum or you have to admit there is a sensible limit to the amount you should have relative to a winter peak demand. It’s a recipe for getting it wrong and excessive costs.

2. That, as I highlighted with the distributed nature of renewables and a lot of “system hidden” solar at low voltage distribution level as well as a reduction in system inertia from large gas and nuclear plants the grid is rapidly moving to a point where it’s unmanageable by grid control. There may be solutions, but my guess is it’s expensive and is going to require automation some time soon. The problem there is software or AI than can reliably do the job and I don’t think that technology is at a reliability level yet I’d trust with running the grid given the consequences if it goes wrong. That should mean now that we seriously look at curtailing or stopping new renewables because of both the national and political risk of an event like the one in Spain here in the middle of winter.

3. That with only 0.81% being our emissions and the evidence is that the left-wing belief that everyone will follow our lead is not born out by the reality over the last 20 years. Other countries are taking a much more pragmatic route. Is that because of the costs? Probably not. It is cheap at lower levels on the grid where its variability is manageable and doesn’t create issues for grid stability. Where it gets expensive and dangerous is when it’s the predominant source on the grid. Should they be rethinking this until at least there is a clear thought-out plan as to how it can be reliably managed and be cost effective at very high grid penetration?

4. Money: There’s not much to go around. As this summer highlights, the climate is global, removing our 0.81% will not change the warming trajectory materially. We will have to look at adaptation which itself has huge costs. I genuinely don’t think we can afford to do one of the two let alone both. Is this a time where we really need to be putting resources into adaptation rather than net zero?

5. The economy: There’s no money without a functioning growing economy and energy is the base price input to every industry and particularly heavy industry and in an increasingly uncertain world, where war is looking increasingly likely, you will need heavy industry for war and we are offshoring most of it, which is a strategic mistake. Once gone, you lose the know-how and end up behind the prevailing technology. Not good in the current world political climate.

CONCLUSION FROM IAIN

As a country we can only do so much on climate change. I agree that we should continue in the journey to Net Zero, but I do not believe the 2050 target is realistic if we are not to decimate our economy. It is in no one’s interest to make our country uncompetitive in world markets, yet that is exactly what the rush to Net Zero is doing. The government says it wants to revive our manufacturing sector but fails to explain how that is possible when we have by far the highest energy costs of all our major European and worldwide competitors. There has to be a balance.

Those who seek to persuade us that the journey to Net Zero by 2050 on the basis, as Zack Polanski put it, that the fight against climate change is the biggest challenge we have faced since World War II, need to understand that if people are to buy into it, they need to be persuaded, not terrified. The cataclysmic and sometimes cultish language used by people who seem to understand nothing about the power of persuasion, need to do better.

Clearly, the wildfires this summer have made this whole debate seem much more urgent, but governments need to think about how we can make ourselves more resilient both as nations, and communities, and also individuals. This will be a growing theme of our national debate in the next decade and it’s why I am about to commission essays for a new book on all aspects of resilience, and I’ll soon be starting to look for a publisher. It’s a massive topic. Originally, I was envisaging a short book, but I’m now up to 34 chapters and counting.

My conclusion from the wider debate on what can be done to ameliorate global warming is this. Successive COPS have demonstrated that world governments are consistently failing to adopt measures which will limit future temperature increases. I see no prospect of this changing any time soon. That’s the bad news.

The good news is that technological advances are progressing in all sorts of areas, and it is technology and human innovation, as well as possibly AI innovation - which will be our saving grace. And that’s were goveernment funds should be invested.

I’m not being complacent, merely realistic.

My concluding message is this. If, as a country, we can’t stop or reverse global warming -and we can’t -, then we have to redirect our efforts to working out what we can do to adapt to it. That’s where our policy focus should now be.