Report

Flex factor: How government can keep network costs on bills down

This report from UK think tank IPPR states that the government must strike a balance between bringing down energy bills and building a system fit for the future.

Government must strike a better balance between bringing down energy bills now and building a system fit for the future.

Delivering a clean, secure electricity system is essential for economic growth and lowering bills in the long term, and this will require major investment in expanded and modernised electricity networks.

However, these upgrades come with immediate costs for households. The part of energy bills that pays for the grid has already risen by £129 since 2022 and is projected to rise by a further £108 between 2026 and 2032. With energy bills already a top financial concern for households, there is a clear political risk if costs continue to rise without visible benefits. The government therefore faces a difficult balancing act but is not currently getting it right. The system does not consistently incentivise value for money, and cheaper ways of managing energy – such as flexibility solutions – are not being used enough. To maintain public support and deliver a fair transition, government must prioritise reforms that reduce costs and deliver tangible benefits to households while building the energy system of the future.