Energy costs could halve by 2050, says system operator
11 December 2025
Britain could cut the share of its economy spent on energy to almost half today’s level by 2050, according to new analysis from the National Energy System Operator (Neso).
The findings come in its latest Future Energy Scenarios, which map out several possible routes to meeting the UK’s climate targets. Neso emphasises that these are not predictions but planning tools showing how different levels of electrification, hydrogen use, bioenergy and consumer participation could shape the future system.
The report suggests energy costs, currently about 10% of GDP, could fall to roughly 5–6% by mid-century. That drop is projected even with rising demand driven by population growth, a larger economy and increasing power use from data centres and other intensive industries.
Neso says the modelling also highlights how a net zero system could shield the UK from global fuel price shocks. During the 2022 energy crisis, surging fossil fuel prices pushed up national costs by the equivalent of 1.8% of GDP. Under its “Holistic Transition” pathway, a similar shock in 2050 would add 0.3%, which Neso argues underlines the value of relying less on imported fuels.
All the pathways show a shift away from overseas fossil fuels towards domestic investment in renewables, networks and electric heating. Neso says this could lower ongoing running costs and support economic and environmental benefits, including job creation and improved air quality.
The scenarios diverge on cost depending on how carbon is treated. When carbon costs are included, the Holistic Transition route is presented as the lowest-cost option to 2050. If carbon is excluded, the “Falling Behind” scenario appears cheaper in the short and medium term, although Neso warns it would face higher expenses after 2050 and would forgo the advantages of early decarbonisation.
The organisation cautions that all estimates rely on assumptions about technology prices, policy direction and consumer behaviour. Even so, it says the analysis offers useful evidence for long-term planning as the UK moves towards a more resilient, lower-carbon system.
Claire Dykta, director of strategy & policy, says:
“Projecting future energy costs is very difficult, but our analysis suggests that Britain could halve energy spending by 2050. We would also be less affected by energy price changes under a decarbonised system, reducing the economic impact of price spikes like those in 2022. Our pathways are designed to help with strategic planning and policy development, and we see potential for costs to be even lower than our models suggest.”
