Ed Miliband has stated many times that renewable energy is cheaper than gas and will bring down household energy bills. We all instinctively knew that Ed was lying but I’m going to present the evidence that he was lying. I will present the economics of solar in this post, having already presented wind energy in a recent post.
1) Ed is proud that the UK is leading the way on renewable energy yet the UK has the highest energy costs in the G20. The UK’s energy costs are 4 times those of US.
2) A report commissioned in 2020 by the World Bank ranked the UK’s suitability for solar energy production at 229th out of 230 countries (Ireland came last). .
https://documents.worldbank.org/en/publication/documents-reports/documentdetail/466331592817725242/global-photovoltaic-power-potential-by-country
3) The UK currently spends approx. £8bn on natural gas per year. Ed wants to spend £260-£290bn by 2030 on his Clean Power plan – £43bn to £48bn per year. Much of this spending is to connect remote windfarms. Prices cannot come down when costs are skyrocketing.
https://www.neso.energy/publications/clean-power-2030
4) The UK paid over £12bn on subsidies for renewal energy in 2024. Plus £2.5bn for grid balancing and £1bn for the capacity market. Solar energy’s share of these costs is aporox. £3bn. Yet Ed wants to increase solar energy capacity from 15GW to 47GW by 2030. More capacity equals more subsidies.
5) In 2023, according to energy trends data, the UK generated 135.8TWh from all renewables, mostly wind, solar and biomass. The subsidies and extra costs for this electricity cost us around £113 per MWh. Adding the market price of electricity would mean the total cost of renewables is around £180 per MWh. The market price of gas is around £60 per MWh
https://www.gov.uk/government/statistics/energy-trends-section-6-renewables
6) The govt applies a carbon tax to gas of approx. £60 per MWh, thereby almost doubling the price paid by consumers. When Ed tells you that renewables are cheaper than gas, he is referring to the market price of renewables without subsidies (£180 – £113 = £67 per MWh) compared to the retail price of natural gas, inclusive of carbon tax (£60 + £60 = £120 per MWh.
Whereas the economic cost of renewables is £180 per MWh compared to £60 per MWh for gas.

7) A commitment to increase total solar capacity from 15GW to 47GW within a decade implies a minimum level of subsidies of £6 billion per year at 2023 prices.
8) After 3 years, the efficacy of solar panels reduces by 1% to 2% per year.
As such, useful economic life of solar panels is 20 years. However, the payback period for solar plants – the overnight capital cost divided by the annual operating margin – is 35 years based on the average prices from 2017 to 2023 (cf. usual commercial average of payback period of 10 years). This confirms that solar plants will always require subsidies to attract private investment.
9) The breakeven price of electricity for new investment in solar plants is about £150 per MWh at 2023 prices over a 25-year life. (Cf. £60 per MWh for natural gas). Another reason that UK energy prices will be staying high.
10) NESO has confirmed that all existing gas power stations will need to be retained as backup for when renewable energy isn’t sufficient. NESO predict 5% of energy will continue to come from gas. This means all the fixed costs of gas stations will remain. Also, gas stations are less efficient when not running at full capacity meaning much higher per unit gas prices.
11) Ed’s predictions for ‘saved’ carbon emissions from Renewables do not include the emissions from manufacturing solar panels in China nor the emissions from shipping the panels to the UK.
12) Energy from renewables cannot be effectively stored. The battery plants that are being proposed will be hugely expensive and will not be able to provide energy at a national scale for more than a couple of minutes. Plus, they are highly inefficient meaning much of the stored energy is lost.
Conclusion – The combination of limited solar resources plus high capital and operating costs imply that solar plants are and will continue to be a poor investment in purely commercial terms, requiring huge subsidies and associated infrastructure costs. Very high energy prices are here to stay. Ed may well choose to bury the true costs of renewables in the public finances, but, one way or the other, UK taxpayers will still be paying to run 2 energy systems in parallel, one of which is loss-making.
