Labour's net-zero dash risks pushing electricity prices HIGHER in short term, IFS warns

From the Newshound archive · first published 22 September 2026.

The Institute for Fiscal Studies and LSE have warned that Labour's push to decarbonise the electricity grid by 2030 could raise electricity prices in the short term rather than cut them. The IFS found that recent 'strike prices' — guaranteed payments locked into 20-year contracts with renewable generators — have already come in higher than expected. A less aggressive procurement approach could boost competition and bring costs down, the think tank said. The report warns that pricier electricity could actually slow down the wider net-zero push, because electrification of heating and transport depends on power being affordable.

Scottish wind power is sometimes 'effectively free' — yet households pay no less because flat-rate tariffs ignore when and where electricity is generated.

The IFS and LSE recommend making time-varying tariffs the default, so households save money by running dishwashers and charging electric vehicles at off-peak times.

Labour has already ruled out zonal pricing, but the report says smarter subsidies — higher heat pump grants in windy regions, bigger solar subsidies in gas-dependent areas — could still cut bills.