The UK electricity market is in the midst of a major transformation, driven by decarbonization goals, infrastructure expansion, and evolving policy frameworks. The focus is on increasing renewable generation, improving energy security, and stabilizing prices in a volatile global market.
In 2025, renewable sources made up over half of Great Britain’s electricity generation, surpassing gas, nuclear, and imports. The closure of the UK’s last coal-fired power plant in 2024 marked the end of a 142-year era, significantly cutting carbon emissions from the grid. However, wholesale electricity prices have risen sharply—up about 40% year-on-year—due to lower wind output, colder weather, and a heavier reliance on gas-fired plants.
Major infrastructure projects are underway, such as the Eastern Green Links subsea cables, which will connect Scotland’s renewable capacity to demand centres in England. The government is also implementing sweeping reforms through the Energy Act and the creation of Great British Energy, a publicly owned company dedicated to expanding domestic clean energy generation. Plans for the Sizewell C nuclear plant are moving forward, set to supply electricity to millions of homes.
Market support mechanisms like Contracts for Difference continue to encourage low-carbon generation, while the Review of Electricity Market Arrangements introduces measures to improve flexibility, reduce constraint costs, and enhance system reliability. Businesses are being encouraged to adopt demand-side flexibility, shifting energy usage to off-peak hours and integrating battery storage to reduce costs.
The sector also faces emerging competition. Tesla has applied to supply electricity in the UK, potentially introducing innovative tariffs that favour electric vehicle owners and renewable energy users. At the same time, traditional suppliers are reinforcing their positions, with significant investments in gas infrastructure to maintain supply security during the energy transition.
For consumers, the Ofgem price cap has fallen slightly, bringing the average dual-fuel bill down to around £1,720 annually. Still, high electricity costs remain a concern for both households and businesses, especially in energy-intensive industries like AI data centres.
