The National Energy System Operator has published an assessment of the illustrative costs of the Future Energy Scenarios 2025, finding energy-related spending could fall from around 10% of GDP in 2025 to about 5-6% by mid-century.
FES 2025, published in July, considers three decarbonisation pathways with varying levels of electrification, hydrogen, bioenergy and consumer engagement, NESO said.
The report analyses the costs of those pathways and their differences to help government and industry make more informed decisions, the operator added.
Energy costs as a share of GDP are projected to decline despite rising demand driven by population growth, increasing GDP and consumption from data centres.
Exposure to fossil fuel price volatility is also substantially reduced by 2050, with the 2022 energy crisis adding extra costs equivalent to 1.8% of GDP compared to pre-crisis years.
An equivalent shock in the Holistic Transition pathway would raise 2050 energy costs by 0.3% of GDP.
The analysis outlines a shift from imported fuels to investment in Great Britain’s renewables, networks and more efficient electric heating systems.
When carbon costs are included, the Holistic Transition pathway has the lowest cost over 2025-2050, while ignoring carbon costs makes the Falling Behind scenario cheaper by about 0.4% of GDP on average a year over the period.
Claire Dykta, director of strategy and policy at NESO, said: “Projecting future energy costs is notoriously difficult, but our analysis suggests that Britain could halve the share of spending related to energy by 2050.
“Our analysis also shows that we would be less exposed to energy price volatility under a decarbonised energy system, reducing the economic impact of a spike in prices as we saw in 2022.
“Our pathways are designed to provide insights that could support strategic planning and policy development, and we have also identified scope for costs to be lower than what we have modelled.”