Blog | Paulina Gonzalez-Martinez | Oct 2025
Investing wisely to balance affordability and decarbonisation
UK leading energy retailers have recently warned in a parliamentary Energy Select Committee that the cost of electricity might continue to rise even if wholesale cost falls. They have raised concerns about the affordability of electricity, citing costs associated with network maintenance, system balancing, and policy-related charges in the short term, which could negatively impact the pathway towards decarbonisation.
While these cost pressures are real, they do not mean that affordability and decarbonisation are mutually exclusive. Rather, they reflect the upfront investment needed to build a resilient, low-carbon electricity system. The critical issue, as our research has consistently shown, is how these investments are sequenced, financed, and recovered in ways that avoid placing unnecessary pressure on consumers.
Moreover, our research has identified two key principles for delivering a net-zero transition that maximise sustainability, equity, and economic benefit. First, plans must be developed with a clear understanding of the costs involved and who will bear them. Second, actions must be carefully coordinated to ensure the necessary resources are in place when needed.
Planning for prosperity: making net zero work for everyone
Our recent analysis of SP Energy Networks’ proposed investment plans illustrates this point clearly. The findings show that proactive, planned investment delivers significant and lasting economic benefits: a potential boost to UK GDP of up to £2 billion a year, support for around 11,500 jobs, and modest but positive gains in household spending power (around £60 per household per year). These gains are considerably larger when investment happens ahead of demand growth, as this enables some downward pressures on the electricity price, which offset the effects of paying for the investment on the network.
Even if the downward pressures are not reflected in the electricity bills, GDP and job gains are still possible, albeit on a smaller scale. Similarly, simply reacting to demand changes could cut these benefits by roughly £500 million a year and 3,100 jobs. The analysis also shows that outcomes improve further when skills and labour shortages are addressed, reinforcing the need for planning and investment in people as well as infrastructure.
Achieving the decarbonisation of the electricity system by 2030 remains a bold and necessary ambition. To maintain public confidence, it must be underpinned by evidence-based decisions about who pays, when, and how. Independent research and policy analysis play a vital role in ensuring that the transition to a low-carbon economy is not only fair and affordable for households and businesses but also supports competitiveness.
Paulina is a Knowledge Exchange Associate at the Centre for Energy Policy, working at the intersection of research, policy, and public dialogue, helping to translate research into actionable insights.
Image credit: Getty Images.