Building a cheaper, resilient energy system
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The Energy Competitiveness Unit was set up in August 2026 to develop and stress test credible policies and strategies to significantly reduce the costs of the UK energy system over the rest of this decade. The Unit is evidence-led and non-partisan, working with a broad range of experts and stakeholders that share a common goal to make the UK’s energy system as cheap and resilient as possible.
The Energy Competitiveness Unit is hosted by Project Tempo.
The Energy Competitiveness Unit exists to develop policies and strategies to reduce the costs of the UK’s energy system.
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Depending on your definition, taxes, charges and levies make up 8-10% of the electricity bill for the average household. Aspects of this system are decades old and no longer reflect the challenges facing the energy system.
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The UK is projected to spend £90bn on upgrading its distribution system by 2031. We need to ensure that we choose the right investments and reduce costs in building a resilient energy system.
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Our energy system is subject to a complex and overlapping regulatory system and has often led to decisions not adequately considering the impact of the wider economy and households.
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Upgrading our energy system requires tens of billions of capital investment, we need to find ways to ensure that capital is raised in a cost-effective way that aligns the interests of both investors and end users.
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Decarbonising the energy system has involved a series of policy interventions to encourage investment in renewables. As we enter a new phase of the energy system, we need to review these legacy policies and assets to ensure that they do not undermine our future needs.
Key areas of focus
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The UK is in the midst of a ‘cost of energy’ crisis.
Our domestic energy prices are the second highest amongst our peers in the European Union and the G7. We have higher industrial electricity prices than any other country in the European Union.
These higher costs have made British industry uncompetitive and have put households under financial pressure. This has led to lower levels of economic growth and stagnating living standards.
The policy debate has primarily focused on sources of energy and security of supply. However, supply is only looking at one piece of the jigsaw puzzle.
The reason why our costs are higher than the rest of the developed world is a lack of a coherent long-term plan for our energy system. We have layered policies and regulations on the energy system without thinking about how these individual measures interact with the rest of the system or the consequences for business and households.
The overall energy system costs £70-80bn a year, and if we want to substantially reduce the cost of energy for households and businesses we need to explore a range of interventions that can reduce the cost of this system by billions of pounds. This will require more than just one tax change or policy measure.
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We need a comprehensive approach that investigates our legacy policies and assets, the tax and levy system, network and transmission, regulation and governance as well as the cost of capital. These cannot be addressed in isolation as individual measures will have an impact on the broader system and on wider policy objectives. We need to think systemically.
Taken together, a package of measures across these policy areas could reduce the costs of the system and energy bills, by billions of pounds per year.
The role of the Energy Competitiveness Unit is to address this gap, educate policy makers on the importance of our energy system and develop solutions for how we can substantially bring down the cost of the energy system.
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The Energy Competitiveness Unit (ECU) is hosted by Project Tempo, a European non-profit research organisation headquartered in London. Project Tempo produces granular public opinion data on energy and climate policy, helping policymakers, businesses and civil society design proposals that earn durable public support. Its flagship EuroPulse programme surveys more than 50,000 voters across 25 countries each year, with dedicated country activities in France, Germany, the United Kingdom, Poland and Italy, and a thematic programme applying the same methods to farming communities across Europe.
This work builds on Project Tempo's research on public concern about energy affordability. Non-partisan and independently funded, Project Tempo publishes its research openly at www.projettempo.com.
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Staff
Andrew O’Brien is Director of the Energy Competitiveness Unit. Andrew leads on the work of the Unit and is UK Lead at Project Tempo. Previously Andrew was Head of Secretariat at the Independent Commission on Neighbourhoods and Director of Policy and Impact at Demos, a think tank. Andrew has extensive policy expertise on economic policy and industrial strategy and writes regularly on these subjects in the media.