Sussex Energy Group at SPRU

Paul Mathews

Sometimes I get over-excited at cheap stuff in ‘the middle-of-Lidl’ (perhaps a sign of getting old…). But earlier this year it was very much with a professional energy policy hat on.

Sadly it wasn’t in the UK, but an online advert for Lidl Germany and specifically €299 for a small 2.24 kWh battery.

Batteries’ falling cost curve is well documented. But the availability of small plug-in storage for homes represents something incredibly novel and exciting. They might also be on the cusp of take-off in the UK with Octopus’ planned 2027 release of the Nook Cube. Critically, these batteries should be both vastly cheaper and more convenient: being genuinely small (‘shoe box size’) and incredibly simple, just plugging into a regular 3 pin socket, avoiding the significant hassle and cost of professional installation.[i]

The significance of these batteries arises from another trend that makes me particularly excited – the increasing variance in smart tariff consumer electricity prices. Below is the Octopus Agile tariff (that follows wholesale prices) for Wednesday 5^th August 2026.

The first thing that jumps out is negative prices from 10am until 4pm, driven by big solar PV generation. Negative prices. You get paid to take electricity off the grid. Incredible! But the key point is the large trough-to-peak spread. As more and more renewables produce energy when ‘they’ want, not when it is currently demanded, this variation in prices is likely to increase.

Now combine these two trends and consider a thought experiment: how much would you benefit from a Lidl-style plug-in battery if last Wednesday’s price profile happened every day of the year, charging up at negative prices and using the battery to avoid buying electricity later in the day?

Depending on the assumptions it would be in the region of 40p-52p on the day, so £147-£190 a year. As a return on a €299 (approximately £270) investment this is quite sensational, paying for itself in under 2 years.[ii]

Of course, a day in early August is not representative of the year-as-a-whole, since there is much less solar in the winter, but at the same time more wind. But the ability to move demand around across the day still pays off. An excellent, more systematic analysis by the Resolution Foundation last year covered shifting demand using a quite conservative peak-to-trough 12p difference. This study didn’t include plug-in batteries in their report last year, such is the rapid pace of technological change, but even with conservative assumptions of an upfront cost of £450 and a 12p spread, such batteries would still generate a return around £60 p.a. (or 13% tax free).

The Government seems to have only partially noticed this opportunity. The 2026 Warm Homes Plan did discuss batteries,[iii] but was more focused on 4 kWh batteries that require professional installation. The benefit of these small easy-to-install plug-in batteries also appears to be a blind spot for the modelling by the Government’s official climate watchdog, the Climate Change Committee (CCC).

All good things must come to an end…

Will this price pattern and the amazing opportunity for small batteries continue?

First, on negative prices. These have been increasing in frequency and intensity on Octopus Agile (see table 1 below). Whilst it is difficult to know how much of this is a genuine trend due to increasing renewables rollout, or noise from the weather and/or loss-leader pricing, negative prices are also now widely observed in wholesale markets in the UK and other jurisdictions.

Table 1: Octopus Agile negative prices

Time period (YTD 1 Jan to 6 Aug)	Frequency of negative prices (hours)	Average price when negative (pence)
2024	71	-1.81
2025	89	-1.80
2026	146	-3.72

However, I suspect negative prices are probably going to be temporary. Commercial grid-scale battery storage has exploded in recent years (see chart below) and continues to grow, which combined with increasing inter-connector flexibility, will surely gobble up most negatively priced electrons before they can reach consumers.

But a significant spread between peak and off-peak prices may still remain for a while, certainly if we assume the face pace of renewables deployment continues, and if commercial storage and interconnectors are slowed by deployment bottlenecks and long lead in times.

….but nearly everyone’s winner (maybe)

There will be two categories of winners from smart tariffs and small plug-in batteries.

First, the early direct adopters who get the benefits described above. But take-up is unlikely to be equal. Both financing and information savviness would point to lower take-up from low-income consumers. Upfront costs are non-trivial given nearly a third of the population have under £1000 in savings though I suspect it could probably be awareness that could be a larger initial problem.

However, critically it is not just the wealthy and savvy who will benefit. So much of our electricity system and its associated costs are geared around meeting peak demand.[iv] Reducing this means spending less on electricity supply capacity (either renewables or fossil fuels) to keep the lights on. In addition, home storage is particularly useful as it cuts peak demand in the local low voltage network, so reducing the need for investment in reinforcement.[v] Anything that cuts the cost of the electricity system overall will thus help all electricity consumers, including those without smart tariffs and plug-in batteries.

And the cost of this system – already too high – looks set to increase. The CCC has estimated that we need to be spending £22 billion in 2029 on electricity supply to hit net zero. If all of these costs were ultimately borne by households, the average cost would be around £740.[vi] Brutal.

Plug-in batteries could also be a far cheaper than many supply side options. Take Sizewell C which is looking to cost at least £38bn to deliver an extra 3.2GW of capacity and adding £17-19 to an average household bill. I calculate that reducing the evening peak by 3.2GW would require around 2.4m optimised plug-in batteries. At £450 per battery this would come in around £1bn (or 3% of the cost of Sizewell).

Where this ends up is of course very uncertain. The more people take up plug-in batteries, the smaller the evening peak and the smaller the benefit, in turn reducing the incentive. It will also depend on all the other whole-system parameters such as the pace of renewables supply deployment.

Stay away VAT man!

So plug-in batteries and smart tariffs – what can the Government do?

First, adjust perspectives. Battery storage should be about making things simple and easy to use, and here 2 kWh plug-in batteries have many benefits over 4 kWh.

Second, plug-in batteries are small agile tech, so a key lever is for deregulation, and for Government to get out of the way, bar ensuring a decent minimum safety standard.

Is there a case for subsidising plug-in batteries which are clearly so beneficial to direct users?

Yes, at least initially because of the large indirect benefits of a cheaper electricity system. Nearly all tech roll-out follows something like an ‘s’ curve in deployment, needing to break out from low-level niche early adopters to the mass market.

So the best option would be to prime early deployment as quickly as possible using the tax system. My understanding is only professionally installed batteries are currently exempt from standard rate 20% VAT. This should be extended to novel plug-in batteries as they arrive on the market to create a fair playing field. A relatively short sunset period (say to 2029) would be relatively fiscally cheap, potentially even entirely ‘negligible’ in terms of the fiscal rules, and in the longer term might even ‘pay for itself’ fiscally as a lower price energy system increases economic growth, reduces inflation and thus debt interest spending and perhaps even rein in DESNZ infrastructure bids at the next Spending Review.

VAT would also be the most useful lever as it could probably be operationalised quickly, helping to get the small plug-in battery market up and running alongside Octopus’ Nook Cube roll-out next year. This could be a big bang moment for the product, not just to help Octopus but stimulating a wider competitive market. Hopefully in a year’s time we will all be getting excited at seeing plug-in batteries in the middle aisle of our local discount retailer.

Calculations

Operating benefits: If you charged up on Octopus Agile between 13:30 and 14:30 on the 5^th August 2026 you would have been paid -4p per kWh. Now you don’t want to run your plug-in battery to extreme charge or discharge to keep it in good health, so only using 60% of battery capacity gives 1.34 kWh of usable space. If you substitute for the expensive peak use between 18:30-19:30 (average price 35p per kWh) the battery would have saved 52p on Wednesday. 1.34 kWh is actually quite typical electricity consumption from my own household over the evening, so not unreasonable. If that happens on 365 days a year you are looking at a £190 return.

Arguably this is overstating the benefits as the 35p peak rate, is 9p than the current OFGEM price cap (26p)[vii]. Though adjusting for cherry picking the negative prices and somehow keeping the OFGEM price cap for the peak for a 30p spread still leads to a 40p saving on the day, and theoretically a £147 return.

Upfront cost:  €299 converted fairly badly at 0.9 to the £ would have cost £270. Assuming you need to add some extra bits like an inverter, which a quick check on Wickes is £150[viii], would perhaps point to a more realistic price for the Octopus Nook Cube around £450.

Fiscal costs: Assuming a cost of £450 * 20% standard rate VAT = £90. The threshold for negligible policy costings recently increased to £10m p.a. and fiscal costings below this are not included in the OBR’s assessment of the fiscal rules. This implies more than 110,000 units would need to be sold in a year to induce a non-negligible costing.

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[i] By way of comparison Octopus do offer battery only installation but with prices starting at £3,947 for a smart 5 kWh battery that requires professional installation.

[ii] In reality you’d probably need to pay a bit more than €299 and I suspect the Octopus Nook Cube will be a bit dearer. But even a 50% mark up to £450 it would still give a payback period of less than 3 years.

[iii] The Warm Homes Plan contains 62 mentions of ‘battery’ or ‘batteries’ compared to 52 mentions of ‘insulation’ and 29 mentions of ‘boiler(s)’ and encouraging for this author just five mentions of ‘hydrogen’. But as an example of the focus on large 4 kWh battery see illustration on page 26.

[iv] Dieter Helm has for many years been excellent at pointing out the importance of system cost not marginal cost. A good example being this recent article.

[v] The CCC have estimated that around 20-30% of the cost of upgrading the electricity supply system will come just from network reinforcement (Chart 7.5.7 CB7 main report), large amounts of which may be unnecessary if more load is stored at the local low-voltage network level during the off-peak.

[vi] In practice, much of this would directly fall on businesses, although a substantial share would likely be passed through indirectly via higher consumer prices.

[vii] https://www.ofgem.gov.uk/information-consumers/energy-advice-households/energy-price-cap-unit-rates-and-standing-charge

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Photo credit  Creative Commons Attribution 2.0 Generic licence

By Siegfried Evens, Visiting Fellow, SPRU and SEG

Governments around the world revisit nuclear energy as part of the race to net zero. But an important question often remains overlooked: how do we train the people who make nuclear technology possible?

I have studied how nuclear engineering education developed in the United States and Sweden between the 1950s and 1970s to draw lessons from history. The research shows that nuclear engineering did not emerge as a standalone field overnight. Instead, it grew through collaboration between physicists, chemists, mechanical engineers, materials scientists, and other specialists working together to solve complex problems they could not figure out on their own.

The study also reveals that the skills expected of nuclear engineers changed over time. Early training focused heavily on nuclear physics and radiation. As nuclear power plants became larger and more sophisticated, engineers increasingly needed expertise in areas such as heat transfer, materials performance, and reactor safety.

The comparison between the US and Sweden shows the importance of political culture in nuclear engineering. The United States built nuclear expertise through a decentralized network of national laboratories, industry, and emerging nuclear engineering departments. Sweden, meanwhile, pursued a more centralized model in which existing technical universities worked closely with state-led nuclear institutions.

The study is a reminder that nuclear expertise is something we actually have to organize as a society. And for a future in which nuclear power is built and used safely, we do not only need engineers with broad technical knowledge, but also the ability to address broader challenges related to safety, policy, economics, and society.

This research was published in the journal Nuclear Technology, accessible here.

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Credit CC By 2.0

Dr Josh Lait, Prof Tim Foxon,  Dr Andrew Sudmant, and Mr Ruaidhri Higgins-Lavery. 

This has previously been published on the EDRC site: https://www.edrc.ac.uk/news-blog/climate-action-is-undervalued-how-can-we-fix-that/

A backlash against the United Kingdom’s net-zero commitments is growing. It tends to rest on two simple claims:

1. Reaching net zero is expensive. 
2. This cost will unfairly impact the most vulnerable in society.

As the most effective misleading claims usually do, each has a kernel of truth. The annual net cost of reaching net zero is expected to peak at £33 billion in 2029, before falling as technology improves and operational savings kick in, eventually leading to net savings by 2041. The ‘front-loaded’ cost is a real challenge, especially for a government seeking re-election in 2029. And energy bills are a real and legitimate concern for households, businesses and local government.

But this narrow focus on costs misses a much bigger picture.

Climate action is undervalued. This is a problem

Today, energy and climate policies are mostly judged on their direct monetary costs and benefits, like the price of installing heat pumps or the savings on energy bills.

Our joint research with the Edinburgh Climate Change Institute (ECCI) shows that this approach systematically undervalues climate action, especially measures that reduce energy demand.  

Based on direct monetary costs and benefits, demand-side solutions, such as promoting active travel, dietary changes, and warmer homes, can appear less attractive to elected officials than large-scale energy supply-side projects. This form of assessment can make energy demand solutions appear less aligned with the UK Government’s aim to promote economic growth. 

This is misleading.

Valuing climate action more effectively

Many climate actions deliver a wide range of social, economic, and environmental benefits – often called ‘co-benefits’.

For example, investing in walking, cycling, and wheeling doesn’t just cut emissions it also:

• improves physical and mental health;
• reduces air and noise pollution;
• eases congestion.

These benefits are real and are valuable. Yet they are often overlooked or treated as secondary in local authority climate decision-making.

Implementing measures to meet the UK’s 2033-2037 climate targets for six city regions across Scotland, Northern Ireland, Wales and England suggest that they could yield up to £164 billion in net benefits. 79% of these benefits are social benefits that come from demand-side solutions which improve health outcomes, reduce congestion, and create warmer homes.

Why this matters

Highlighting this ‘hidden value’ can shift the current debate on reaching net zero. If climate action is seen only as a cost, the recent backlash will grow. However, if its full benefits are recognised, especially for health, fairness, and quality of life, it becomes easier to build political and public support for local climate action.

Encouragingly, local authorities are starting to move in this direction.

New tools assess the multiple benefits of climate action

Our new policy brief shows that local authorities are beginning to use new tools to both identify and communicate the ‘hidden value’ of climate action to elected officials and the communities they serve. This can help build support for local climate initiatives, like promoting active travel or green home renovations.

These tools also show who benefits from climate action, who pays, and where burdens fall. They do this using maps, neighbourhood breakdowns, analysis of impacts on protected characteristics or types of household, and expert judgement. Examples include the UK Co-benefits Data Atlas, the Carbon and Co-benefits Decision Support Tool, and Cornwall Development and Decision Wheel.

They help local authority decision-makers design policies that more fairly distribute the costs, benefits, and risks of low-carbon actions – for example, prioritising active travel in deprived areas with poor air quality and road safety.

What policy experts are saying

At a recent webinar on our joint EDRC-ECCI policy brief, Dr Sean Field, a lead analyst seconded at the Department for Energy Security and Net Zero, said:

“What’s really exciting is that the UK Co-benefits Atlas itself takes a slightly different approach, looking at whole areas and a wide range of benefits, and putting a monetary value on those. I think this is one of the areas of deep interest in policy circles in Whitehall…. The next step is to translate these benefits into business cases that local authorities can pick up and incorporate into their proposals.”

Jamie Brogan, Strategy Director at the Scottish Climate Intelligence Service added:

“We know that attracting investment is challenging, and that most local authority climate projects do not stack up under a traditional return-on-investment model. Co-benefits help to address this by making a broader case for action. We also know that local authorities are tackling a highly complex challenge and will only make progress if they can demonstrate benefits across multiple policy priorities. In turn, this helps local climate policy teams engage other policy teams and organisations.”

What needs to happen next

We argue in our new policy brief that national guidance is needed to help local authorities:

• maximise the wider benefits of climate action;
• minimise adverse impacts on the most vulnerable in our local communities.

One practical step would be to issue supplementary guidance to the Treasury’s Green Book for local authorities on multiple benefit assessments. The Green Book is national guidance on the process of assessing the costs, benefits, and risks of different policies for achieving government objectives.

Currently, new tools are being implemented without public consultation. This is a problem.

Our research shows decision-makers and communities think about benefits and risks differently. Local authority decision-makers focus on longer-term, area-wide impacts. Where possible, they monetise these impacts to align a local business case for action with national guidance.

For example, multiple benefit assessments for Derry City and Strabane suggest potential health benefits from active travel valued at £165 million, alongside air quality improvements valued at £110 million and noise reductions valued at £134 million over 2025 to 2050. This evidence is not as persuasive to local communities, who understand benefits and risks of climate action through their lived experiences of local neighbourhoods and public services.

We argue how communities understand benefits and risks should also inform the criteria for multiple benefit assessments. For example, real-world stories about the immediate benefits and fairness of local authority climate decisions and initiatives could help counter the view that costs and burdens fall unfairly on the most vulnerable in the UK.

In the longer term, regulation could require local authorities to assess the multiple benefits of climate action.

Climate action isn’t just a cost. It’s an investment in our local communities, where the returns are currently being overlooked.

Related papers

Lait, J., Foxon, T. J., Higgins-Lavery, R. & Sudmant, A. (2026). Valuing the multiple benefits of local authority climate action in the UK – Energy Demand Research Centre. Energy Demand Research Centre (EDRC), Policy Brief 5. https://www.edrc.ac.uk/publications/valuing-the-multiple-benefits-of-local-authority-climate-action-in-the-uk/.

Lait, J., Foxon, T.J., McLachlan, C. and Sudmant, A. (2026). Valuing the wider benefits of net zero: Conceptual foundations of new assessment frameworks in the United Kingdom. Energy Research & Social Science, 131:104516. Doi: https://doi.org/10.1016/j.erss.2025.104516.

Lait, J. and Foxon, T.J. (2026). Decision-support tools for the assessment of co-benefits: Insights from UK energy and climate policy. Energy Policy, 211: 115174. Doi: https://doi.org/10.1016/j.enpol.2026.115174.

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In 2013 I published an article called “The political sustainability of climate policy: The case of the UK Climate Change Act.” I concluded  that the political future of the Act was uncertain. For many years that seemed unduly pessimistic, and both the Act and the Climate Change Committee that it created were held up as models for other countries, many of which adopted at least superficially similar legislation. Through the political turmoil of the post-Brexit years, the consensus in favour of the Act seemed to hold.

That consensus began to erode under Rishi Sunak, and today Kemi Badenoch announced that that a Conservative government would repeal the Act. Reform have already said they would scrap the net zero target that is enshrined in the 2019 amendment of the Act and which was endorsed by the CCC. Parties collectively polling at 48% of the vote, one of which may well win the next election, are now an existential threat to the Act.

Why is this? Why is it that a model that appeared to work so well for so long is now facing such headwinds?

The 2013 article framed the challenge for the Act as one of policy feedback, i.e., the need for a policy to itself create effects that would strengthen political support for the continuation of the policy, and to avoid creating ‘negative feedback’ that would strengthen opponents.

One problem was that the design of the Act and the nature of its key institution, the CCC, were primarily technocratic. Some commentators, seeing political consensus on climate through the 2010s and early 2020s, took the view that the Act underpinnned and helped create and maintain this consensus. However, I have always see the relationship as the other way round; it was the consensus on climate change up to 2023 that meant that challenges to Act were relatively minor, making it look more robust than it was.

In fact, technocratic bodies are always reliant on external constituencies to defend them, as Adam Posen points out in the case of central banks (also increasingly under attack):

The only way that central banks can credibly commit to price stability over the long-term is to maintain a political constituency in civil society supportive of such a policy regime. That support from civil society, not any legal statute, is what protects central banks when they make a hard decision that angers politicians. Absent that support, laws regarding central banks can be changed or threatened to be changed until monetary policy is changed. Central bank independence is endogenous to that support, and it will be curtailed when such support is lost.

The same is very much the case with the CCC and the Act itself.

So what have been the policy feedback effects in play over the last 17 years since the Act was passed?

On the negative side, what appears to be a negative interpretive effect – whereby the stance a politician or a member of the public takes in relation to an issue becomes bound up closely with their political identity – seems to have strengthened.

In my 2013 analysis, I noted that despite the apparent consensus at the time the Act was passed, with only a handful of votes against, this masked dissent on the backbenches of the Conservative party. A survey of Tory MPs in July 2008 indicated that one third of Conservative MPs were not convinced about man-made climate change. A survey of 141 prospective parliamentary candidates in January 2010 found that they collectively ranked reducing Britain’s carbon footprint as the lowest out of 19 policy priorities. The late 2000s and early 2010s saw increasing resistance to onshore wind energy in primarily Conservative-voting rural areas, leading to pressure on MPs, 100 of whom wrote to the then Prime Minister David Cameron in 2012 demanding an end to the programme (which followed in 2016). The pressure on the Conservatives to move away from consensus increased with the rise of UKIP on the right through the middle of the decade. For a while, in the wake of the Brexit vote, this pressure went away, but of course has now reappeared far more strongly with the rise of Reform. Reform is an authoritarian, socially conservative and nationalist populist party, and it now well-documented that such parties are hostile to the climate agenda, primarily on ideological grounds. Climate change is seen by populists as a cosmopolitan, liberal concern that has captured the elite and which imposes costs on the people. The Conservatives had already moved to the right with the expulsion or loss of more moderate one nation Tories in 2019, but in recent years have moved further towards more populist positions in a (so far ineffective) attempt to stave off the challenge on the right.

It is true that on the political centre and left, amongst the Labour party, the Liberal Democrats, Greens and the nationalist parties in Scotland and Wales, the commitment to climate policy remains strong, and if anything has also strengthened over the last 17 years as the impacts of climate change have become clearer. But it remains the case that there is a real possibility that the next election might be won by Reform outright, or possibly by a coalition of Reform and the Conservatives. To survive under these circumstances, the Act will have needed to generate some strong positive feedback effects. The most important of these are probably the creation of jobs and investment through climate policy, and a move to cheaper energy, and for both of these effects to generate political constituencies which will be able to stave off attempts to axe the Act.

Both government – see Ed Miliband’s recent speech at the Labour party conference – and business – see the response of Rain Newton-Smith of the CBI on the Tory announcement – use the jobs and investment argument. It is potentially powerful, but go beneath the headlines and the picture is a bit more complex and mixed. There are some areas (for example offshore wind in Humberside) where new jobs easily linkable to climate policy are very visible. But more broadly, the effects of decarbonization will largely be to ‘green’ existing jobs, rather than the ending of ‘brown’ jobs and the creation of new ‘green’ jobs. There is also a tendency to focus on manufacturing jobs, but there are some issues with this in a UK context. Manufacturing has become increasingly automated in the last few decades, and now provides relatively few, albeit higher skilled and higher paid jobs. The UK is overwhelmingly a service economy – we are not Germany. Perhaps particularly important for a political defense of the Act, trade unions are somewhat ambivalent on the issue of green jobs. Unions are broadly supportive of the transition in principle, but point out, rightly, that new green jobs tend to be less unionized and have worse working conditions than the old high-carbon jobs (for example in the switch from offshore working in oil and gas to wind).

The other potential important area of positive feedback is the cost of energy, and in particular electricity. The UK has been a success story for the ending of coal-fired power generation and the rise of renewables, especially solar and wind. Supporters of climate policy will rightly say that the costs of these new forms of electricity generation are now cheaper than fossil fuels. However, this was not always the case and electricity consumers (especially households and small businesses as some large energy intensive industries are exempt) are still carrying the legacy costs of a major subsidy programme in the 2000s and 2010s. At the same time, the lower costs of renewables do not yet fully benefit those consumers because of the design of wholesale electricity markets. This design means that despite the spread of renewables, gas-fired power generation still sets the price for a large proportion of the time. The current government’s clean power plan may eventually lead to big savings on bills (£300 a year has been promised), this will probably not happen until the early-mid 2030s, and in the meantime, the price cap for consumers has actually gone up in the last year.

What is the overall lesson here? First, that while building institutional and legislative structures around climate change is important, policy has to lean into the politics. A Climate Change Act is insufficient on its own, as it is does not insulate you against political change. The advice of the CCC is merely advice (with only a rather fragile requirement by government to report to Parliament on progress or lack thereof). In the end, like all other climate policy, it’s only as good as the political consensus on climate change. Moreover, the technocratic nature of the Act and the Committee has meant that insufficient attention has been given to the strengthening that consensus through policy feedback. As long as right wing populism remained under the surface of British politics, this was less of a problem, but this situation also masked a weakness in the absence of strong positive policy feedback effects.

There are now two urgent and important tasks needed to address this situation. First, build a much stronger political coalition around the jobs and investment benefits of climate policy, which can be done only by bringing unions on board and hence addressing their concerns. Second, by doing something to cut electricity bills in the short-term, and visibly presenting this as a glide path to permanently low bills in a new low carbon world. Without doing these, the risk is that the Climate Change Act will not survive into the next decade.

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