Sky-high energy bills are a massive problem for families, pensioners and businesses across the UK. A typical household is having to pay £50 a month more than they did five years ago – just to keep the lights on, or heat their homes in winter.
Nigel Farage and Kemi Badenoch are peddling the myth that it’s the fault of renewable power. They say the reason energy bills are so high is that we’re investing too much in solar panels and wind turbines, and if we just stopped that investment – and relied more on oil and gas instead – then bills would magically come down.
That’s rubbish. What’s caused energy bills to soar in recent years isn’t renewables; it’s fossil fuels. The prices of oil and gas rose sharply when Vladimir Putin invaded Ukraine, and we’ve all felt the impact in our bills.
But Farage and Badenoch are right about one thing: we are paying too much for renewable energy – just not for the reasons they claim.
After nearly a decade of negligent Conservative energy policy that sent bills soaring, the right energy policies will be able to send them back down and cut them in half within ten years. Energy policy in service of the British people, not a Farage policy in service of Putin.
— Liberal Democrats (@libdems.org.uk) 2025-07-20T14:01:24.066Z
Generating electricity from renewables is now significantly cheaper than gas, and half of the UK’s electricity comes from renewables, but people aren’t seeing the benefits in their bills. That’s because the wholesale electricity price is set by the most expensive fuel in the mix – and in the UK, that’s almost always gas. In 2021, the cost of electricity was set by the price of gas 97% of the time.
So if we’re going to bring energy bills down – and make sure people see the benefits of cheap renewable energy – we have to break the link between the cost of electricity and the price of gas.
Liberal Democrats have a plan to do just that, which would see energy bills cut in half by 2035. Here’s how:
Together, our analysis shows that this plan could cut energy bills in half for a typical household: from £1,720 today to £850 in 2035.
Back the Liberal Democrats' plan to break the link between gas prices and energy costs, so people can enjoy the benefits of cheap, clean power.
In our 2024 General Election Manifesto, we set out plans to invest in renewable power so that 90% of the UK’s electricity is generated from renewables by 2030.
We would drive a rooftop solar revolution by expanding incentives for households to install solar panels, including a guaranteed fair price for electricity sold back into the grid. And thanks to Max Wilkinson’s Sunshine Bill, the Government has committed to requiring all new homes to have solar panels installed as standard.
To succeed we need to upgrade Britain’s grid, we would create a strategic Land and Sea Use Framework to facilitate this, and reduce access costs for grid connections.
We would invest in energy storage, including green hydrogen, pumped storage and battery capability. And we would empower local authorities to develop local renewable electricity generation and storage strategies.
In our 2024 General Election Manifesto, we set out plans to make homes warmer and cheaper to heat.
We would launch an emergency Home Energy Upgrade programme, with free insulation and heat pumps for low-income households and a central role for local authorities in delivering this programme. And we would introduce a new subsidised Energy-Saving Homes scheme, with pilots to find the most effective combination of tax incentives, loans and grants, together with advice and support.
We would immediately require all new homes and non-domestic buildings to be built to a zero-carbon standard, and progressively increasing standards as technology improves. We would introduce requirements for landlords to upgrade the energy efficiency of their properties to EPC C or above by 2028.
Contracts for Difference – introduced by the Liberal Democrats in government – give energy companies the certainty they need to invest in renewables. If the wholesale price drops below the agreed strike price, the government pays them the difference.
But crucially, they give consumers a fair deal too. If the wholesale price goes above the strike price – like they did when gas prices soared when Russia invaded Ukraine – energy companies pay back the difference, taking money off household energy bills.
If all renewables were on Contracts for Difference, the electricity market would be a lot fairer and people would see the benefits of cheap renewables in their bills when gas prices are high.
The problem is, only about 15% of renewable power is generated under Contracts for Difference. The rest is still governed by the old Renewables Obligation Certificates (ROCs) scheme – introduced by the last Labour Government in 2002 – when renewable power was much more expensive so companies were given lucrative deals to invest.
Unlike Contracts for Difference, companies with ROCs get paid the wholesale price – in other words, the price of gas – with a subsidy on top that adds £90 a year to energy bills.
The UK Energy Research Centre has proposed moving those older renewable projects off ROCs and onto Contracts for Difference. In 2022, they estimated that it could save around £15 billion a year – cutting the typical household energy bill by more than £200.
This would be voluntary, but renewable generators have every incentive to move onto Contracts for Difference. They would get a guaranteed fixed price for the next 25 years – which is much better for them than being dependent on very volatile gas prices.
And with the current Renewable Obligation Certificate deals all expiring over the next 12 years, switching to a long-term Contract for Difference now would give them the certainty they need to secure investment in refitting and upgrading renewable infrastructure.
That’s exactly why Contracts for Difference have proved so successful at attracting investment since we introduced them more than a decade ago, and it’s why three bodies representing the UK’s energy companies – Energy UK, RenewableUK and Solar Energy UK – all backed these proposals when the UK Energy Research Centre put them forward in 2022.
I’m proud that once again it is the Liberal Democrats leading the way, with our vision for an economy that is growing strongly, where everyone feels the benefits.
