Taking an economic lens to our Future Energy Scenarios

Great Britain’s energy system is in the middle of a major energy transformation. In this blog, Mike Thompson, Chief Economist at the National Energy System Operator (NESO), gives a summary of new NESO analysis that builds on our Future Energy Scenarios. The work considers what the economic picture could look like, depending on how quickly decarbonisation happens and the choices that are made along the way. 

In the decisions on Great Britain’s journey to running on clean energy, security and costs are critical too – it’s a balance that requires us to think about all three together. Security, decarbonisation, and cost.

Good decisions need good data, so I’m pleased to share new analysis published by NESO today on the economics of our Future Energy Scenarios (FES). I hope this work will be useful to our stakeholders -but first - some guardrails!

What this isn’t

Spoiler (1) this isn’t the cost of net zero

Spoiler (2) the scenarios or pathways we look at aren’t predictions of the future

Spoiler (3) these costs can be compared to the overall economy - but they aren’t a prediction of how they play out for economic growth or consumer energy bills

What’s FES? And what did we do?

For anyone not familiar with FES, the latest edition was published in July 2025. That outlined three illustrative pathways for how Great Britain’s energy sector can reach its decarbonisation targets in different ways. It includes a ‘Falling Behind’ scenario where progress is slower and emissions targets are missed. 

Today’s publication adds a new dimension – what those illustrative pathways might mean for the economy and how strategic choices could shape costs over time.

What did we find?

Energy-related spending, in total and as a share of the UK economy, falls to 2050 in all scenarios. Today, energy-related costs represent around 10% of GDP (Gross Domestic Product, a measure of the size of the economy). By 2050, they are expected to decline to somewhere between 5% and 6%—even as electricity needs grow because of population increases, a larger economy, and things like data centres using more.

The report also shows how, by meeting decarbonisation goals, Britain’s exposure to volatility in fossil fuel prices, such as gas, could reduce significantly. The energy crisis in 2022 increased national energy costs by the equivalent of 1.8% of GDP. Under a fully decarbonised system in 2050, a shock of the same size would have a far smaller impact—around 0.3% of GDP. A mix of clean technologies based in Britain reduces the risk of suddenly paying much more for fuels that are priced on global markets. 

Investment and long-term trends

A common trend in our pathways is a move away from spending on imported fuel towards investment in local infrastructure. That could be people building renewables like solar and wind, or engineers delivering new electric cables to carry electricity – even people buying more efficient heating systems. Our analysis shows how this early investment opens the door to reduced operating costs for the economy over time, and it can support local jobs and opportunities.

The analysis also allows us to compare between pathways (albeit with various caveats that we detail in the report!). Including the costs of carbon emissions, the lowest-cost option is the Holistic Transition path, which meets all the carbon targets and deploys a mix of options. If the cost of emitting carbon is ignored, the slower-moving Falling Behing scenario appears cheaper in the short term. It also results in higher costs after 2050 and there is less scope to generate the benefits mentioned earlier.

Final reflections

Projecting costs far into the future is full of uncertainties of course. But the data points to a clear conclusion: there are credible pathways towards decarbonisation that are consistent with a growing economy. It also helps us in developing pathways and making decisions by identifying opportunities to cut cost.

NESO’s analysis isn’t policy – it’s intended to support decision-makers by providing balanced, evidence-based insights into the trade-offs ahead. As ever with FES, there’s a wealth of data published alongside the document setting out the findings. I hope you find it useful.