Sir Dieter gives me a simplified example. The UK’s peak electricity demand is around 45 gigawatts (GW), he says. In the past, this could be met with roughly 60GW of capacity from coal, gas and nuclear power stations.
As the system shifts towards renewables, far more capacity is needed – not just wind and solar, but back-up for when they are not producing. In Sir Dieter’s estimate, the UK is moving towards something closer to 120GW. At the same time, the grid must also be expanded to carry electricity from offshore wind farms to where it is needed.
The exact figures are debated, but the direction is clear: partly because of renewables, the system is becoming larger, more complex and more expensive. Some of those costs are already showing up in bills. Expanding the grid – building new pylons and power lines – is pushing up network charges.
There are also “balancing costs”, including payments to wind farms to switch off when the system cannot absorb all the electricity they produce. And until recently, a subsidy scheme accounted for around 10% of the average household bill.
There is another issue. The UK is richest in one of the more expensive renewable resources – offshore wind.
Solar power has seen dramatic cost reductions thanks to mass production. But Britain’s often dull skies – especially in winter, when demand is highest – limit how far it can carry the system.
Offshore wind is more dependable but it involves large, site-specific engineering projects that cannot be replicated in the same way, and so have not seen the same sustained falls in cost. At the same time, rising prices for materials such as steel and rare earths – along with higher interest rates – have pushed costs up further.