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Renewables projected to overtake gas on cost within five years, report finds

20 February 2026, https://eibi.co.uk/news/renewables-projected-to-overtake-gas-on-cost-within-five-years-report-finds/

Renewable electricity is set to become the most economically favourable source of power in the UK by 2028 to 2029, according to new analysis by the Renewable Energy Association (REA), even after accounting for the full costs of expanding grids, storage and transmission.

The findings are set out in the Renewable Energy Association’s Renewable Cost Analysis Report 2025, which models two scenarios for the electricity system. Under a ‘Clean Power 2030’ pathway, annual investment of about £40bn would expand renewable capacity and cut the share of unabated gas to below 5%.

An alternative ‘No New Renewables’ scenario assumes no additional wind or solar capacity until 2040, with natural gas meeting future demand, which would mean lower upfront spending but higher ongoing fuel costs.

The REA concludes that although electricity generation will remain expensive across all technologies, renewables represent the most cost-effective long-term option. Including employment impacts, the analysis suggests renewable generation becomes the net economic winner by the end of the decade.

The modelling assumes flat gas prices over the next five years. If gas prices fall by 25% between 2025 and 2030, the point at which renewables become cheaper is delayed by only one year when excluding job benefits.

The report says its analysis includes all additional grid, transmission, storage and system costs associated with higher renewable deployment, in contrast to traditional levelised cost estimates that focus on generation costs alone.

It also highlights wider benefits from renewables, including reduced exposure to volatile international gas markets, improved energy security and environmental gains such as lower carbon emissions and cleaner air.

The REA recommends continued government support to manage short-term electricity costs, including possible reductions to green levies and value added tax, alongside stable policy to encourage investment. It says early investment in renewables would deliver long-term  economic benefits, domestic employment and greater energy security for the UK.

Read REA’s Renewable Cost Analysis Report 2025.

March 2, 2026 - Posted by Christina Macpherson | renewable, UK