"Political consensus is cracking, industry is hobbled and high-profile projects are being postponed thanks to some of the highest electricity prices in the developed world"

European politicians pitched the continent’s green transition to voters as a win-win: Citizens would benefit from green jobs and cheap, abundant solar and wind energy alongside a sharp reduction in carbon emissions. Nearly two decades on, the promise has largely proved costly for consumers and damaging for the economy.

Germany now has the highest domestic electricity prices in the developed world, while the U.K. has the highest industrial electricity rates, according to a basket of 28 major economies analyzed by the International Energy Agency. Italy isn’t far behind. Average electricity prices for heavy industries in the European Union remain roughly twice those in the U.S. and 50% above China.

The shift is also adding to a cost-of-living shock for consumers that is fueling support for antiestablishment parties, which portray the green transition as an elite project that harms workers, most consumers and regions.

While sunlight and wind are free, harnessing them entails significant infrastructure investments, including in battery storage for when the sun isn’t shining or the wind blowing, and vast redundant capacity. These additional costs, obscured by subsidies and carbon taxes, mean energy prices in places like Germany and the U.K. are likely to remain higher than other countries for years to come, some economists say. The stubbornly high prices, Helm said, suggest it’s the overall system cost driving prices.

Parts of the green transition have proved unexpectedly costly. When Scotland’s biggest offshore wind farm opened in 2023, it was feted as a symbol of Britain’s push into a new era of cheap low-emissions energy. But today, British taxpayers spend tens of millions of pounds a year for the Seagreen wind farm to not produce electricity. Why? If the wind farm was left constantly on, it would send big pulses of energy from northern Scotland to southern England that would fry the U.K.’s aging grid.

"Europe’s decision to slash fossil-fuel use is unusual historically, economists say. In earlier energy transitions—from wood to coal, or coal to oil—countries continued to use the outgoing fuel while adding the new fuel on top. "

Helm, the Oxford professor, argues renewable energy will remain more expensive than fossil fuels because the overall system is more cumbersome. The U.K. used to meet its electricity demand with 60-70 gigawatts of power capacity. Now, the country requires twice as much capacity, 120 gigawatts, to meet slightly lower demand—not to mention the additional storage facilities and interconnector supplies to and from continental Europe.