The Story We Are Being Sold About Energy
Professor Dieter Helm, Professor of Energy Policy at the University of Oxford and author of the 2017 Cost of Energy Review for the British Government, offered a challenging assessment of Scotland’s energy strategy, the cost of renewables, grid expansion, energy security, industry and the scale of the climate challenge. He was invited as a witness to give evidence to Scottish Government Economy, Tourism and Energy Committee on 1st September 2026.
Prof. Helm’s central argument was that we need to look beyond individual wind turbines, solar panels or headline generation figures and examine the energy system as a whole, including what the energy costs, who uses it, where it is produced, how it is transported and what happens when it is not available.
In his presentation and the questions that followed he covered a remarkably wide range of issues.
Professor Helm’s presentation raises a series of questions about how Scotland’s energy system is being designed.
How much generating capacity does Scotland actually need?
How much electricity will be exported, and at what cost?
Who will use future renewable surpluses?
How much grid infrastructure will be required?
Who ultimately pays for that infrastructure?
How much backup generation and storage will be needed?
What happens during prolonged periods of low wind and low solar output?
Can Scotland attract the energy-intensive industries that could make use of surplus generation?
Should more attention be given to nuclear and other forms of firm power?
How should the wider use of oil and gas be addressed?
And, above all, what does the complete energy system actually cost?
Those questions sit alongside the climate objective itself. Prof Helm’s makes crystal clear that looking only at renewable generation figures does not provide the full picture. The cost of networks, storage, backup, contracts, energy security and the location of generation all form part of the system that consumers and businesses ultimately have to pay for.
The full video allows Professor Helm’s presentation and the subsequent questions and answers to be heard in his own words.
I heard…
Scotland is building far more generation capacity than it currently needs
Prof. Helm began with Scotland’s existing energy strategy.
He pointed to the target of around 20GW of additional renewable capacity by 2030, against peak electricity demand of approximately 5GW. He noted that Scotland’s peak demand had fallen from around 6GW or 7GW in 2010.
That creates a very large gap between the amount of generating capacity being developed and the amount of electricity Scotland itself requires at peak demand.
Prof. Helm argued that this means Scotland’s electricity system is increasingly directed towards exporting electricity, principally to England and, through England, to Wales and elsewhere.
That is very different from the system Scotland had around 2010, when electricity generation relied heavily on nuclear, coal and gas, alongside hydro and a smaller amount of wind.
At that time, Scotland also had substantially more industrial electricity demand.
Since then, industrial demand has declined. Helm referred to Grangemouth as one example, while also pointing to other industrial closures and relocations.
He argued that the important question is not only what industry has left, but what energy-intensive industries have failed to come to Scotland and Britain over the past 15 to 20 years.
The energy price problem
Prof. Helm argued that Britain has some of the highest electricity costs in the developed world and that this has consequences for industrial competitiveness.
He compared British energy costs with those in the United States and China, arguing that the much lower energy costs in those countries make them more attractive locations for energy-intensive industries.
He also pointed to the growing electricity requirements of data centres and artificial intelligence.
These facilities require extremely high levels of reliability. Helm referred to the industry requirement for “five nines”, meaning 99.999 per cent availability and reliability.
He argued that a system dominated by intermittent generation creates a very different challenge for industries requiring that level of reliability.
Data centre operators are therefore looking at technologies including small modular nuclear reactors and are also building their own backup generation in some locations.
Is Scotland actually reducing global emissions?
Prof. Helm said the first question should be whether the policies being pursued are making a significant difference to climate change.
His answer was that they are not currently doing enough.
He stressed that climate change is global. An emission produced in Edinburgh has the same global atmospheric consequence as one produced in Shanghai or Texas.
He pointed to the continuing rise in atmospheric carbon dioxide concentration, saying that the concentration had risen from increases of around two parts per million a year since 1990 to around three parts per million a year more recently, reaching approximately 428 parts per million.
For Prof. Helm, the atmospheric concentration is the important measure because it reflects the balance between emissions and sequestration.
He also pointed to damage to natural carbon sequestration, including the role of rainforests and oceans.
His argument was that if current policies are supposed to address climate change, simply doing more of the same will not necessarily produce the required result.
Electricity is only part of the energy system
One of Prof. Helm’s recurring points was that electricity should not be confused with the whole energy system.
He said that around 77 per cent of Scotland’s energy still comes from fossil fuels, with similar proportions in England and substantially higher proportions globally.
Electricity is important and more of the economy is expected to electrify, but oil and gas are also used extensively outside electricity generation.
That includes transport, industry, heating, manufacturing and the production of materials and products.
Prof. Helm therefore argued that decarbonising electricity represents only one part of the wider challenge.
He also pointed out that global energy demand could roughly double by 2050. If that happens, the challenge is not simply to decarbonise the existing economy but to provide energy for a much larger global economy while reducing its emissions.
Renewables are not simply about the cost of a turbine
Prof. Helm challenged the way renewable energy costs are often discussed.
Wind and solar have very low marginal generation costs once they are operating. But Helm argued that looking only at the marginal cost misses the wider cost of the system required to make intermittent generation useful.
He used Britain’s electricity system to illustrate the point.
Britain previously had around 45GW of peak electricity demand and approximately 60GW of generating capacity. Helm said that the system now requires just under 120GW of capacity to meet peak demand that is lower than 45GW.
He attributed part of this increase to the characteristics of an intermittent renewable system, including the need for additional generation capacity, transmission, distribution, batteries, storage and pumped storage.
His argument was not that renewables should not be used, but that comparisons with fossil fuel generation need to include the cost of the complete system required to provide reliable electricity.
The hidden costs of intermittency
Wind and solar generation are geographically dispersed and intermittent.
That means electricity has to be moved from where it is generated to where it is needed, while other sources of generation or storage must be available when renewable output falls.
Prof. Helm argued that this requires a substantial expansion of transmission and distribution infrastructure.
He also pointed to the need for batteries, pumped storage and other forms of backup.
By 2030, he said Britain was projected to require around 35GW of gas capacity on standby, potentially operating for only 4 or 5 per cent of the time.
He described this as effectively replicating much of the existing electricity system with gas standby capacity in order to deal with periods when wind and solar output is low.
Who pays for renewable generation?
Helm also examined Contracts for Difference, or CFDs.
Under a CFD, a generator receives a price for its electricity based on the terms of the contract. Helm argued that the arrangement does not make the generator responsible for the wider transmission, excess capacity or backup costs associated with the system.
He argued that generators can continue to receive payments even when the electricity they produce is not required, subject to the terms of the relevant arrangements.
He also warned that new renewable generation contracted under CFDs can lock consumers into relatively high prices for many years.
He referred to offshore wind projects with costs reaching around £113 per megawatt hour, and said customers could ultimately be paying CFD prices of £70, £80, £90 or more per megawatt hour even if the wholesale market price were much lower.
What happens when Scotland has too much electricity?
The other side of the equation is what happens when renewable generation exceeds demand and available network capacity.
Scotland is developing substantial amounts of wind generation, while neighbouring countries can also experience periods of high wind and solar output.
Helm questioned whether there would always be sufficient demand for Scotland’s surplus electricity, including demand from continental Europe.
He questioned whether the proposed interconnectors would always be available and whether they could necessarily provide an outlet at the precise times Scotland had surplus electricity.
When there is insufficient demand or transmission capacity, generation can be constrained.
Helm argued that this raises a fundamental question: what is the electricity being produced for, who will use it and who will pay for the infrastructure required to move or store it?
The industrial opportunity
Prof. Helm acknowledged that very low wholesale electricity prices during periods of surplus could represent an opportunity.
The difficulty, he argued, is finding industries capable of using intermittent electricity economically.
Some of the industries associated with the future economy, including data centres and artificial intelligence, require extremely reliable electricity supplies.
Using intermittent electricity therefore requires additional storage or backup, adding further costs.
Helm questioned whether Scotland could attract substantial new energy-intensive industry if its electricity system was expensive and difficult to guarantee.
Climate change and consumption
During the question and answer session, Helm was asked whether Scotland should be looking at countries such as China, which are investing heavily in renewable energy.
His response was that the focus should be on consumption rather than simply where products are manufactured.
He used the everyday example of people travelling to meetings, wearing clothes, sitting on furniture, using plastics and relying on energy-intensive communications technology.
Those products and activities involve energy and carbon emissions even if the manufacturing takes place somewhere else.
He argued that moving production overseas can reduce territorial emissions while leaving the underlying consumption and associated global emissions largely unchanged.
The competitiveness problem
Prof. Helm identified three major variables affecting competitiveness:
- the cost of energy
- the cost of capital
- the cost of labour
He argued that Britain needs to address the high cost of energy faced by industry.
He also referred to borrowing costs and productivity, particularly within the public sector.
His argument was that tackling climate change and improving affordability and industrial competitiveness are not necessarily separate objectives, but achieving both would involve difficult choices and significant costs.
Should Scotland build more nuclear power?
The discussion then turned to nuclear power.
Prof. Helm argued that Germany’s decision to close its nuclear fleet prematurely was a major mistake from a climate change perspective, given that the country continued to use substantial amounts of fossil fuel generation.
He said Scotland already uses significant amounts of nuclear-generated electricity because electricity flows across the UK network, even though Scotland has no current programme to build new conventional nuclear capacity.
He stressed that he was not simply “for” or “against” nuclear power. His argument was that if nuclear is chosen, it needs to be delivered in a way that controls its costs.
He compared the cost of Hinkley Point C and Sizewell C with gas generation, arguing that conventional nuclear construction in Britain has become exceptionally expensive.
He said that Sizewell C could ultimately involve costs of around £100 billion for approximately 6.5GW to 7GW of capacity, depending on how the costs develop.
He suggested that the development of small modular reactors could change the economics of nuclear power, although he questioned whether Britain would manufacture them domestically given its high labour and energy costs.
He also referred to developments in the United States where flexible nuclear technologies are being explored that could store excess nuclear generation in heat and other forms for later use.
What about North Sea oil and gas?
Helm was asked about oil and gas development, including Rosebank and Jackdaw.
He distinguished the electricity question from the wider energy system and argued that if the objective is to stop using oil and gas, the policy needs to confront the fact that oil and gas still account for a very large proportion of energy consumption.
He questioned why Britain would reject domestic North Sea production while continuing to import oil and gas from other countries.
His point was that importing the same fuels does not eliminate their use or the associated global emissions.
He acknowledged that completely eliminating oil and gas use would have profound consequences for the economy because of their role across transport, industry, heating, manufacturing and everyday products.
Why Prof. Helm says the word “transition” can obscure the scale of the problem
Prof. Helm was asked how the public could be brought along with the changes required to reduce emissions and energy bills.
He argued that the scale of moving away from fossil fuels is much larger than the language of a gradual transition can sometimes suggest.
He pointed to the enormous growth in global population, economic activity and living standards during the 20th century and the role fossil fuels played in that development.
China’s economic growth, he argued, would not have occurred without fossil fuels.
The challenge now is to provide energy for continuing global economic development while reducing reliance on those fuels.
Prof. Helm argued that this will involve significant costs and difficult choices.
He questioned claims that consumers would automatically be better off because renewable energy would make their bills cheaper.
Are we putting renewable generation in the wrong places?
Prof. Helm made one of his strongest geographical arguments when discussing Scotland’s renewable generation.
He questioned why large amounts of offshore wind generation should be located off the north-east coast of Scotland when Scotland’s peak electricity demand is around 5GW and much of the major electricity demand is further south in England.
He acknowledged that Scotland has excellent wind resources, but argued that generation located a long distance from its principal market requires extensive transmission infrastructure.
That means pylons, substations, cables and other infrastructure have to be constructed to move the electricity south.
He suggested that the public debate about pylons should therefore include a more fundamental question: why is this generation being built here, and is this actually the best location for it?
His view was that existing generation is already committed, so the immediate question is what should be done with it. But he argued that future development should take account of the location of demand and the cost of connecting generation to the system.
The grid could become one of the biggest costs
The final question to Prof. Helm focused specifically on grid capacity.
He agreed that the nature of renewable generation requires a much larger electricity network because wind and solar generation are low in energy density, geographically dispersed and intermittent.
He said Britain could need to roughly double grid capacity.
He also acknowledged that grid development is not keeping pace with what is required, with planning and other political and economic factors contributing to delays.
At the same time, Scotland is already experiencing constraints on renewable generation, meaning wind farms can be paid to reduce or stop their output because the network cannot accommodate all the electricity being generated.
Prof. Helm referred to estimates that meeting the 2030 target could require between £30 billion and £70 billion of additional grid investment, while suggesting that actual costs could be higher because major infrastructure projects frequently experience cost overruns.
The question is not simply whether we can build it
Prof. Helm’s final argument was about affordability.
The question, he said, is not simply whether the infrastructure can be built because a government has set a target.
The question is whether customers and industry can afford the resulting capital expenditure and electricity network costs.
He argued for deciding what can realistically be afforded, then working out how available investment can deliver the greatest possible benefits for climate change, industrial competitiveness and consumer affordability.
He described this as a “collision with reality”, contrasting the practical constraints of the energy system with the more optimistic story that energy would automatically become cheaper.
He argued that recent increases in energy costs cannot be explained solely by events such as the war in Ukraine or developments in Iran. Those events contribute to prices, but, in his analysis, they are not the fundamental explanation for the underlying cost of the system.
