The landscape for UK renewable energy in 2025

The landscape of UK energy production has transformed significantly over the past 25 years. At the beginning of 2000, the UK's energy mix was primarily composed of coal and gas, with renewable energy accounting for just 2%. Since then, and particularly from 2010 onwards, renewable energy has surged, with a s alone. 

While we do not expect to see the same exponential increase over the next 25 years, not least because the starting base is significantly higher, the contribution of renewables to the energy mix in the UK will continue to rise. But what are the trends we expect to see, and how will the UK government ensure we meet our mandated targets and fulfil their promise of delivering clean power by 2030?

To put the UK’s renewable journey in perspective, Girls Aloud was formed (2002) before the UK’s first commercial offshore wind farm was installed (2003). The last of the 12 Round 1 projects were not installed until 2013, bringing the total Round 1 capacity to 1.2GW. As of June 2024, the UK’s offshore wind capacity was around 14.7GW and the then UK government had a goal of increasing this to 50GW by 2030.

Alternatives to grid connection

Despite all the advancements in energy production, grid connection issues are hindering our ability to deliver clean power and reduce the reliance on fossil fuels. There is no clear indication on how and when this will be resolved, although the previous and current government both vowed to cut grid connection delays. Given the lack of detail around plans, a resolution is unlikely in 2025. In the last few years, deals have fallen through due to failures in securing grid connections (a condition precedent written into many legal documents). 

The queue for the grid has grown tenfold is the past five years and now contains the equivalent of 739GW - double what we need to meet our 2050 forecast.

Updating the grid is crucial for reducing our exposure to international markets and improving our energy security. However, in a survive and adapt approach, we predict that developers may step away from the grid wait times and start to invest in smart micro-grids and partnerships between producer and consumer, allowing energy to be shared among industries when the grid cannot deliver. 

Investment in on-site renewable energy generation and storage can help manage rising costs and provide control over energy issues for businesses, though it requires significant investment and expertise. The rise of self-sufficient energy generating ecosystems could be accelerated by the removal of Business Property Relief (BPR) and Agricultural Property Relief (APR) for farmers announced in the Autumn Budget. This could lead to farmland being sold to developers who in turn set up an off-grid energy supply to local high-energy businesses. 

UK EV manufacturers will fall short of 2025 Zero Emission Vehicle mandates

The zero-emission vehicle (ZEV) mandate for car manufacturers requires that 28% of cars manufactured must be ZEVs. Given that in 2024, only 19.6% of registrations were ZEVs (ie falling 22.4% short of the 2024 mandates), the 2025 target鈥攔epresenting a 43% increase on the current baseline鈥攕eems somewhat unachievable.

The current price point of EVs is driving consumers to seek out cheaper options, which is why Chinese brands are increasingly dominating the market, and this trend is likely to continue in 2025 and beyond. To meet the mandates and continue to develop automotive manufacturing in the UK, the government needs to incentivise demand, financially support production and deliver key EV infrastructure to ensure all aspects are in place to capitalise on the transition to electric motoring. However, it seems unlikely that significant strides will be made in 2025, given the past track record of slow progress and the government鈥檚 lack of funds to make the required investment. 

There is, of course, the approach being adopted by the US in imposing high tariffs on EV imports. However, given the potential negative repercussions, such as a slowdown in uptake due to the lack of lower-price options on the market and/or wider economic implications with our overseas counterparts, it is considered unlikely that the UK will indulge in such protectionist policies.

Growth in auxiliary services 

With the increase in the uptake of EVs, so too is the prevalence of obsolete lithium batteries. These are hard to recycle, and the methods used to recycle traditional batteries simply don鈥檛 transfer to their lithium alternatives. These are typically larger, heavier, much more complex, and even dangerous if taken apart incorrectly. 

The to the House of Lords in September 2024 recognised that the government must 鈥渦rgently review and progress options鈥� to invest in EV and battery recycling facilities. This would ensure that recycling is undertaken by responsible operators and that as many of the critical materials contained in EV batteries as possible can be reused for domestic production. As such, 2025 will likely see a rise in operators undertaking this type of activity and also legislation in respect of lithium battery disposal and recycling.

Examples of other auxiliary services that will likely become more mainstream in 2025 include all-electric crew boats for the offshore wind industry. For all the clean kilowatts generated by offshore wind turbines, the carbon footprint of the construction phase is often ignored. Fuel usage among crew transfer vessels and to ferry equipment back and forth is substantial. Given the obvious oxymoron in such a practice, and the advancements in the early part of this decade on electric crew boats, it is expected that such vehicles will become the main transport option of choice. This will become increasingly important in reducing the UK鈥檚 carbon footprint if the offshore wind development activity ramps up to meet the government鈥檚 stated aim of quadrupling offshore wind by 2030.

Market reforms on the horizon

Several important reforms will come into play by 2025 that businesses must prepare for to contribute to the UK鈥檚 net-zero goals. These include the Market-wide Half Hourly Settlement, which will come into effect in April 2025, and the Energy Savings Opportunity Scheme, which requires businesses to conduct energy audits and identify energy saving opportunities. Additionally, large businesses will be required to report on their energy use, carbon emissions and energy saving measures as part of their annual financial statements. 

We might see an increase in punitive measures in 2025 for businesses that fail to adhere to the regulatory framework. 

In addition, 2025 and beyond might see legislation introduced regarding the decommissioning of offshore wind turbines, obsolete solar panels and similar infrastructure. In 2024, Offshore Energies UK produced guidelines for the removal of offshore wind turbines that have reached the end of their useful life.

Decommissioning of the first generations of wind turbines is already in progress, and the continuous turnover of older turbines will become more commonplace throughout 2025 and beyond. The turbines need to be dismantled and disposed of responsibly and ensuring environmental protection. Therefore, we may see the best practice and guidelines enshrined in legislation in the short to medium term. 

New technologies entering the market

The number of new technologies entering the market is likely to continue rising in 2025. For example, developments in sustainable aviation fuels, recycling the energy produced from road traffic as electricity, nuclear microgrids and carbon capture storage will all continue to evolve. 

Other subsectors, such as forestry and habitat banks, will become more mainstream as an investment option to 鈥榞reen鈥� investors. 

Green things to come

Renewable energy has come a long way since the turn of the century. By the end of the first quarter of the 21st century, it will likely become the main energy source in the UK. The technologies in this sector will continue to develop and refine. We will also see an increase in regulation and perhaps fines for failure to adhere to mandates. However, significant progress in grid upgrades is unlikely in 2025, and developers will look for alternative ways to monetise green energy production.

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