An area that will influence all aspects of the energy sector this year is policy. From the introduction of more rigorous EPC (Energy Performance Certificate) targets to the broader goals of the government’s CP30 (Clean Power 2030) plan, these frameworks will shape investment, development and ultimately progress. Other factors such as geopolitics, global conflicts and the growth of power hungry AI, will also impact energy markets, influencing supply chains and market stability. 

Discover trends sent to dictate the energy market in 2025:

Grid connections are key

The UK electricity grid is struggling to keep up with the increasing demand and the connection queue has become inadequate, with CP30 analysis revealing a tenfold increase over the past five years to 739GW. This growing pressure highlights the urgent need for accelerated network development, especially as annual constraint costs are expected to rise from £2 billion in 2022 to £8 billion by the late 2020s.

To tackle these challenges, upcoming connection reforms aim to link renewable resources in each region of Great Britain, tailored to specific technologies and local demand. This reform is seen by the new Government as a crucial step in transitioning from a centralised to a decentralised energy system, requiring significant time and investment to achieve. Many industry representatives have flagged concerns that the prescriptive regional approach could hinder the delivery of renewable energy projects.

Constrained solar and battery markets

Both the solar and battery storage markets are facing constraints. While solar farm deployment is increasing, progressing projects though planning is increasingly difficult due to concerns about cumulative impact. Rooftop solar continues to grow but is hindered by a shortage of skilled labour. CP30 has acknowledged 15GW of rooftop solar is possible and goes on to set the overall target at 45-47GW. Similarly, the large scale battery market appears saturated, with the number of projects in the system exceeding government targets.

With many quick wins delivered over the last 15 years, future opportunities for solar and battery deployment will increasingly depend on innovation and smart systems. Short duration, consumer led flexibility through heat pumps, smart EV charging, load shifting flexible pricing along with other innovations will play an important role. Storage alternatives to lithium ion batteries will also be required. No significant long duration energy storage (LDES) storage has been deployed in nearly four decades, the last project being Dinorwig pumped storage hydroelectric scheme which was built in 1984. Several new pumped hydroelectric schemes are proposed, the most advanced project being the 1.3GW SSE Coire Glas project.

Evolving corporate Power Purchase Agreements (PPAs)

There has been an  uptick in interest from developers looking to develop private wire projects at scales of 1-20 MW over the last few years. As it is becoming increasingly difficult to get projects through the standalone grid connected model, it is pushing developers to look to quicker alternatives where grid does not delay delivery, so that they can continue to grow their development pipeline. In parallel, high energy consumers are increasingly looking for ways to reduce their operating costs by sourcing cheaper energy.

Paving the way forward

In 2025, the energy sector will refine existing technologies like wind, solar, EVs, and batteries, focusing on better integration. Despite grid and market challenges, laying this groundwork now is crucial for future transformation. Long term market consolidation will likely benefit those with strategic investments over short term gains. The success of these decisions will become evident as projects develop towards the decade’s end.

Further information

Contact Thomas McMillan

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