Why are UK energy costs so high? And how to bring them down
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The UK's energy costs are among the highest in the world not because of recent geopolitical shocks, but due to decades of policy choices that have created a fragile, expensive energy system. Professor Dieter Helm argues that the root causes lie in the 1980s privatisation of energy, which eliminated industrial cross-subsidies and left domestic consumers to shoulder the full burden of grid and system costs after major energy-intensive industries—steel, chemicals, fertilisers, and refineries—collapsed. This de-industrialisation, while reducing territorial emissions, has made the UK’s energy system more vulnerable. With no coal, limited nuclear, and reliance on volatile global gas markets, the UK now operates a 'skinny' energy mix: intermittent renewables, expensive gas peakers, and massive new grid infrastructure. Helm reveals a stark truth: the UK is paying for climate ambition without the cost advantages of other nations—unlike China with coal, the US with cheap gas, or France with nuclear. The real solution, he insists, isn’t more wind farms or nuclear hype, but political honesty: admit that being green is costly, and fix the system by securing domestic gas supplies through long-term contracts, implementing a social tariff for vulnerable households, and making industry pay its fair share of system costs. Without these steps, climate policy will continue to alienate the public and undermine both security and competitiveness.
The UK’s high energy costs predate the Iran war and stem from 40 years of energy policy choices, not just recent crises.
Closing energy-intensive industries like steel and chemicals reduced territorial emissions but shifted system costs to domestic consumers, worsening affordability.
The UK’s energy system is 'skinny'—relying on gas, intermittent wind/solar, and no backup storage—making it vulnerable to global price spikes.
France’s nuclear fleet and the US’s cheap gas give them cost advantages the UK lacks, making its green transition uniquely expensive.
Long-term contracts with North Sea gas producers could lock in stable, lower prices and improve security without increasing emissions.
…and 3 more takeaways available in PodZeus
The Puzzle of UK Energy Costs
Bronwyn Maddox introduces the episode, framing the high energy prices in the UK as a long-standing structural issue rooted in policy decisions, not just current geopolitical events. She sets up the discussion with Professor Dieter Helm as a key expert on energy economics.
Privatisation and the Collapse of Industry
Helm explains how the 1980s privatisation of energy removed industrial cross-subsidies, leading to high prices for domestic consumers. The closure of major energy-intensive industries like steel, chemicals, and refineries left households to pay for the full cost of grid infrastructure.
The Fragile Energy Mix: No Coal, No Nuclear, Just Gas
The UK’s shift from coal and limited nuclear to gas and intermittent renewables has created a system with no backup. Helm details how the loss of coal and lack of nuclear expansion left the country exposed to global gas prices and reliant on expensive, polluting LNG.
The Cost of Going Green: A Global Comparison
Helm contrasts the UK’s energy transition with other nations: China’s coal, the US’s cheap gas, and France’s nuclear. He argues that the UK’s green ambitions are being pursued at the highest cost, without the same economic or security advantages.
The Hidden Costs of Renewables
Despite abundant wind and solar, their intermittency forces the UK to build twice the grid capacity and invest in batteries and gas peakers. Helm reveals that 35GW of gas capacity will still be needed by 2030, running only 4% of the time but costing a fortune.
“If you really want to be the poster child of the world in reducing territorial emissions, why don't you close Grangemouth? Why don't you close the steel industry and hope the car industry fails because of Brexit? Little did I know that all those three things would basically happen.”
“The nice idea that you could, I mean, Tony Blair set this out in an energy paper of 2000 or whatever. I'm feeling the ghosts of previous prime ministers and energy policies passing by this conversation. All governments keep trotting out this stuff about being cheap, secure and green as if it's possible to have all three and it's all going to be apples and pies and all that kind of stuff. And, you know, we are going to be the clean energy superpower of the world. Now, it's nonsense.”
“We don't have the mix of power that other European countries have. We don't have a big bulk of nuclear like France. We don't have some coal still on the system. We have gone for a very what you might call skinny system. in which it's just gas, oil and intermittent wind and solar. That's it.”
Host
Guest
dieter helm
person
north sea
other
bronwyn maddox
person
france
place
united states
place
germany
place
grangemouth
other
hinkley point c
other
china
place
iran
place
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