UK Electricity Prices

Lord Griffiths of Fforestfach Excerpts

Thursday 4th June 2026 Grand Committee

[Lord Griffiths of Fforestfach (Con)]

My Lords, when I was a student at the London School of Economics, there was a thing called the London fog. When it descended, visibility went down to 10 to 20 yards. I must say, as I prepared reading for this debate, I felt that I was entering pure fog. It was confusion and darkness—you were frankly nervous about where you were going.

I will make just three points. The first has already been made, but I want to emphasise it. That is the cost of intermittency. You frequently hear, as the Secretary of State has said, that renewables are nine times cheaper than fossil fuels and gas. In a way, he is right. They are if you consider the price of fuel in connection with them as zero but, on the other hand, intermittency requires enormous investment. Dieter Helm suggests that, in the past, we needed about one-third more capacity to deal with peak demand. Now, he says, we have reached a position where we need twice the capacity to deal with peak demand. In the future, if we are to get the benefit from AI, greater electric vehicles and so on, we need a factor of three. This simply cannot be done from renewables. The enormity of the cost has simply not been recognised by the Government.

My second point is that we have a present grid that is totally out of date. The grid was built to deal with some very large generating companies. I do not know why there were so few. Whenever an economist looks at a few companies, you immediately think of restriction of competition. In the past, there was that small number. Today, you have wind farms and solar parks, and many more access points are needed. The grid is simply not compatible, and we do not have, like other countries, something to fall back on. China and Germany can fall back on coal. France can fall back on nuclear. The US can fall back on oil and gas. We fall back on wind, light and sun. It is really crazy.

My third point is on overregulation. Why should we have one price for power throughout the whole country? Why can we not have a regional pricing of power? If, in Scotland, offshore wind farms and so on are cheaper, why can Scotland not be allowed to attract to the area industries that depend heavily on power? We need much less regulation in this respect and much more flexibility. That is something only the Government can do.

In the 20 years past years, I think we have seen a complete shock in deindustrialisation in this country. If we have any ambition to benefit from things such as AI and to regain the power that we once had, we have to recognise the cost of intermittency. We have to recognise that the grid is out of date and needs restructuring. There is unnecessary government regulation, and we need regional price variation.