Chris O’Shea, the chief executive of Centrica (parent company of British Gas), has warned that electricity prices in Britain are on track to be higher in 2030 than they were during the peak of the energy crisis triggered by the Russian invasion of Ukraine.
Key Details from the Warning:
System Costs vs. Wholesale: O’Shea stated that while only about a third of electricity costs in 2030 will be for the power itself (wholesale), the other two-thirds will come from “system costs,” including network upgrades to reach net-zero targets.
Investment Needs: The warning aligns with findings that massive, ongoing investments are required to construct new transmission lines and strengthen the grid to handle renewable energy.
Business Impact: Analysis suggests that such policy costs and upgrades could add significantly to bills for large energy users by 2030.
Contextual Factors:
Energy Crisis Levels: In 2022, after the Ukraine invasion, wholesale gas and electricity prices reached record highs.
“New Normal”: Industry experts have indicated that despite some recent price dips, electricity prices are expected to continue rising annually due to policy, infrastructure, and non-commodity costs.
Net Zero Costs: The shift towards a clean power system is expected to increase “system costs” on bills, even if wholesale gas prices decrease.
Government Position: The Department for Energy Security and Net Zero maintains that upgrading the infrastructure will protect billpayers from volatile fossil fuel markets in the long term.
O’Shea’s comments underscore a warning that the transition to a greener energy system will not necessarily bring down consumer electricity bills in the short-to-medium term, contrary to some political pledges.
