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2025

Path to Net Zero

Policy Landscape in the UK

Backdrop

02 | Backdrop

Climate Imperative: Emission and Clean Energy Goals

  • The United Kingdom’s primary legislative framework for addressing climate change is the Climate Change Act 2008. This was further reinforced by the Climate Change Act 2008 (2050 Target Amendment) Order 2019, which made it a legal requirement for the UK to achieve net zero greenhouse gas (GHG) emissions by 2050.

  • In addition to domestic legislation, the UK has made an internationally binding commitment under the Paris Agreement. As outlined in its Nationally Determined Contribution (NDC), the UK aims to reduce GHG emissions by at least 68% from 1990 levels by 2030. This ambitious target plays a critical role in shaping the pace and scale of renewable energy deployment across the country.

  • As part of its strategy to meet its climate commitments, the UK Government in 2024 commissioned the National Energy System Operator (NESO) to provide expert guidance on decarbonizing the power sector by 2030. In response, NESO published the Clean Power 2030 (CP30) report in November 2024, outlining potential pathways to achieve this goal.

  • Building on NESO’s analysis, the Government released the Clean Power 2030 Action Plan in December 2024, which established a target for at least 95% of the UK’s electricity generation to come from clean sources by 2030. This clean power target serves as a key instrument in achieving the UK’s broader objective of reducing greenhouse gas emissions by 68% from 1990 levels by 2030, as committed under its NDC.

  • The Clean Power 2030 Action Plan outlines a set of coordinated measures designed to support the rapid expansion of clean electricity generation. These measures include grid infrastructure expansion, planning system reforms, and market adjustments, all aimed at ensuring that upgrades to transmission and distribution networks keep pace with the growth in electricity generation capacity.

  • In its 2025 progress report, the Climate Change Committee (“CCC”) notes that credible plans are now in place to cover around 61% of the emissions reductions required to meet the UK’s 2030 target, reflecting significant progress. At the same time, the CCC underscores the need to accelerate implementation—especially in renewables, grid development, and electrification—to remain on course.

  • Addressing grid bottlenecks, scaling renewable generation, and enabling large-scale storage are seen as critical to avoiding delays in clean energy delivery and meeting decarbonisation milestones.

  • Achieving these goals demands a coordinated approach—combining timely government intervention, strong policy frameworks to remove market barriers and robust private sector investment to ensure an inclusive and equitable energy transition.

Wholesale Market Volatility: Driving the Clean Energy Push

  • Following Russia’s invasion of Ukraine, UK wholesale gas prices spiked to unprecedented levels, driving electricity prices sharply higher due to the UK’s heavy reliance on gas for power generation. In 2022, wholesale gas prices averaged over four times their 2010–2019 level, creating sustained upward pressure on electricity bills.

  • The UK has been acutely vulnerable, with gas setting wholesale power prices around 98% of the time—and gas costs still roughly three times higher than pre-crisis levels.

  • The surge in gas-driven power prices added an estimated £140 bn to the UK’s energy costs from the start of the crisis to the end of 2024—ultimately paid by households and businesses. Compared to pre-crisis annual wholesale gas costs of £10–15 bn, this marks around £90 bn in excess spending, averaging £2,000 per person—£1,300 more than it would have been without the crisis.

  • The previous Conservative government’s policies enabled energy firms like Centrica and Shell to profit from market volatility during the crisis. In 2022, Centrica’s British Gas Energy retail arm saw its operating profit more than triple, while Shell reported its highest earnings ever. Critics argued these windfall profits underscored systemic inequities, as households and small businesses struggled with soaring energy costs.

  • The Labour government’s energy strategy centres on breaking the link between gas prices and power bills by rapidly expanding domestic clean energy and improving efficiency. This approach aims to boost energy independence, cut fossil fuel reliance, and shield the UK from volatile global markets and geopolitical risks.

  • So, the new government’s approach focuses on rapid build-out of wind, solar, and storage, coupled with grid upgrades to reduce imported gas reliance and shield consumers from commodity price shocks.

  • By targeting 95+% clean power by 2030, the government expects to insulate UK wholesale electricity prices from gas market volatility, prevent repeats of the 2022–2023 crisis, and ensure a fairer distribution of energy sector profits.

  • In the long run, this clean energy transition is intended to lock in lower, more predictable wholesale prices, delivering enduring economic resilience alongside decarbonisation.

The Build-out: Scaling Renewables for Security and Net Zero

  • The UK’s renewable energy capacity has been growing steadily, but deployment rates must accelerate sharply to meet 2030 targets.

  • Offshore wind capacity will need to more than triple, onshore wind must more than double, solar capacity must grow fivefold, and battery storage installations must also increase by a factor of five. 

  • To achieve this, the government is pursuing an aggressive grid-scale clean energy expansion strategy across onshore wind, offshore wind (fixed-bottom and floating), solar photovoltaic (“PV”), and battery storage, alongside advancing other large-scale low-carbon technologies such as tidal, hydrogen, carbon capture and storage (“CCS”), and nuclear. 

  • Community benefit incentives—such as local investment opportunities and bill discounts for areas hosting major renewable assets—are being implemented to build public support and accelerate deployment.

Sources: International Renewable Energy Agency (“IRENA”) and Department for Energy Security and Net Zero (“DESNZ”)

Onshore Wind

Set for significant capacity growth through both new developments and repowering of existing projects. Planning and permitting reforms are intended to speed up delivery and maximize generation from proven sites.

Fixed-bottom Offshore Wind

Continue to anchor the UK’s clean energy portfolio, with a strong project pipeline and targeted CfD support aimed at maintaining its role as the single largest contributor to grid-scale renewable capacity. Strategic investments in grid upgrades and transmission links will be key to integrating this expansion.

Floating Offshore Wind

Moving rapidly from pilot and demonstration into full commercialisation, opening up vast deeper- water areas with stronger wind resources. The government is enabling phased CfD contracts and targeted pot allocations to bring this technology to scale within the 2030 horizon.

Utility-scale solar PV

Being expanded through larger, more competitive auction rounds and enhanced grid access for high-capacity sites. Co-location with storage at grid scale is being encouraged to optimize dispatch and reduce curtailment.

Battery Storage

Scaling up to multi-GW levels to provide balancing, peak-shaving, and frequency services for a renewables-heavy grid. Policy emphasis is on enabling longer-duration systems and streamlining their integration with generation assets.

Other Grid-scale Low-carbon Technologies

Such as tidal stream, hydrogen-fired generation, CCS-backed gas, and advanced nuclear, are also being advanced to complement variable renewables and ensure system reliability. These are supported through tailored funding streams and innovation programmes to accelerate deployment.
  • Taken together, these efforts reflect a whole-system approach to decarbonising the UK’s electricity supply, with each technology contributing to a diversified, resilient, and flexible generation mix.

  • By coupling rapid capacity expansion with measures to phase out unabated fossil generation, the government is positioning the power sector to meet its 2030 clean energy target and lay the groundwork for achieving full net-zero emissions by 2050.

Installed Capacity Under DESNZ’s Clean Power Capacity Range (2030), Compared with Current Levels (Q2 2024), in GW

Technology Current Installed
Capacity
DESNZ Clean Power
Capacity Range
Variable
Offshore Wind 14.8 43-50
Onshore Wind 14.2 27-29
Solar 16.6 45-47
Firm
Nuclear 5.9 3-4
Dispatchable
Low Carbon Dispatchable Power* 4.3 2-7
Unabated Gas 35.6 35
Flexible
LDES 2.9 4-6
Batteries 4.5 23-27
Interconnectors 9.8 12-14
Consumer-led Flexibility 2.5 10-12
Total 111.1 204-231

Source: Clean Power 2030: Action Plan Document (December 2024), DESNZ
*Includes Biomass, power Bioenergy with Carbon Capture and Storage (“BECCS”), gas Carbon Capture Usage and Storage (“CCUS”) and Hydrogen.