Cheapest to Most Expensive Energy Production in the UK and Scotland

31st December 2025

Energy production costs can be measured as the levelised cost of electricity (LCOE), which reflects the total lifetime cost per unit of electricity generated (per MWh). For new projects commissioning around 2025, the rough ranking with approximate costs is:

Onshore Wind - cheapest, around £38/MWh

Large-scale Solar – about £41/MWh.

Offshore Wind – around £44/MWh.

New Nuclear – much higher, roughly £109/MWh.

Gas Plants (combined-cycle with carbon capture) – approximately £110–£114/MWh

This means that wind and solar are now significantly cheaper to produce electricity than new nuclear or gas plants when considering lifetime costs.

Why Consumer Bills Don't Always Match Production Costs

Even though renewables are cheap to generate, household bills don’t automatically fall. This is because:

Market Pricing: Electricity prices are set by the most expensive source needed to meet demand, often gas. Even if most electricity comes from renewables, the market price can still reflect higher-cost gas.

Grid and Infrastructure Costs: Investments in connecting new renewables to the grid or upgrading transmission lines add costs, which are included in bills.

Backup and Balancing Costs: When wind or solar output is low, the system needs backup generation from gas or storage, which adds cost to electricity for consumers.

Can More Renewables Reduce Consumer Prices?

Yes — in the long term, but not automatically in the short term:

Increased wind and solar generation lowers the underlying wholesale cost of electricity, particularly when renewables produce a lot of power.

Short-term bills may not drop due to marginal pricing, infrastructure costs, and the need for backup electricity.

Over the long term, a renewables-dominated system with storage and grid flexibility could deliver electricity at a lower overall cost than fossil-fuel-heavy systems, with projected average system costs in the £50–100/MWh range by 2035.

Scotland’s Position

Scotland already generates a very high proportion of electricity from renewables, mainly wind and hydro, and often produces more electricity than it consumes. This means the potential for lower production costs is high, but market rules mean these savings aren’t fully passed on to consumers yet.

Bottom Line

Cheapest electricity production (approximate costs):

Onshore Wind: £38/MWh

Large-scale Solar: £41/MWh

Offshore Wind: £44/MWh

New Nuclear: £109/MWh

Gas Plants: £110–114/MWh

Impact on consumer bills:

Expanding cheap renewable generation is likely to reduce costs over time.

Short-term bills may not fall immediately due to market pricing, grid, and backup costs.