The IFS argues that the transition to flexible demand is no longer just a theoretical benefit but an urgent necessity as the United Kingdom moves to electrify its transport and heating sectors. The proliferation of electric vehicles (EVs) and the installation of residential heat pumps represent a massive increase in the total amount of electricity the grid must deliver. However, these technologies also offer the very solution the grid requires. Electric vehicles, for instance, are essentially large mobile batteries; they do not necessarily need to be charged the moment they are plugged in at 6:00 PM. Similarly, heat pumps, domestic battery storage systems, and smart appliances—such as washing machines and dishwashers that can be programmed to run at 3:00 AM—create unprecedented opportunities to shift demand across a 24-hour cycle without requiring households to reduce their overall energy consumption. The goal is not to use less energy, but to use it at the "right" time.
The scale of the required shift is underscored by recent modeling from NESO’s Clean Power 2030 strategy. To achieve a system that is increasingly dominated by intermittent renewable sources like wind and solar, the modeling assumes that the volume of time-varying electricity consumption will need to roughly triple between 2025 and 2030. As the UK moves toward its goal of a clean power system, flexibility will become the primary mechanism for balancing a grid where the supply of energy is dictated by the weather rather than by the turning of a valve on a gas pipe. Without a significant increase in demand-side response, the costs of managing a renewable-heavy grid could spiral, further exacerbating the price issues already seen over the last decade.
In dissecting the reasons behind Britain’s high electricity prices, the IFS report points to a confluence of factors that have driven costs upward. While global gas prices have played a well-documented role, particularly in recent years, they are only part of a larger story that includes rising network charges, taxes, and various policy levies. The analysis shows that between 2017 and 2025, household electricity prices rose by 13p per kilowatt-hour (kWh) in real terms. When breaking down this 13p increase, the researchers found that approximately 7.5p was attributable to the core costs of energy and supply. However, a significant portion of the rise came from other areas: 1.8p was added due to increasing network charges as the grid is upgraded to handle new connections and renewable inputs, while 2.8p of the increase was driven by taxes, fees, and policy levies designed to fund social programs and the transition to greener energy sources.
