The year ahead: what does 2025 hold for major energy users?
1 January 2025 | 4 minutes
There has been increased emphasis on making decarbonisation central to energy policy (alongside market reform). Considering challenges faced by both businesses and residential customers, the Government intends to reshape the governance and structure of the UK’s energy landscape.
What’s ahead and how can major energy users can take advantage of the opportunities available?
When it comes to energy, the UK’s new Labour government is ambitious. It has set out clear ambitions to partner with the private sector to accelerate the decarbonisation of the grid and overcome many of the barriers that are currently impacting progress towards net-zero, such as planning and regulation. In its first 100 days in power, it has announced £24 billion of private investment into clean energy projects1, formed GB Energy, a government-owned clean energy company and appointed leading experts to the Clean Power 20302 Advisory Commission. The Clean Power 2030 Action Plan, expected to be announced later this year, aims to set out the path to decarbonise the electricity grid, help protect billpayers from volatile gas prices and strengthen Britain’s energy security. In essence, it is focused on outlining a clear ambition for making the grid smarter, increasingly diversified and more reliable, ensuring that it can adapt to new forms of generation. A £21bn investment in both carbon capture and storage (CCS) and hydrogen reflects this ambition. 3
The Government also published its Green Paper Invest 20354 in October, a consultation for its future Industrial Strategy. The net-zero objectives for the Industrial Strategy are to capture the growth opportunities of the Clean Energy Mission and Net Zero transition; identify and support clean energy industrial sectors with the greatest growth potential; and align sector plans with both net-zero and environmental objectives. The Green Paper recognises the pressures that energy prices are putting on growth, stating that “electricity prices in Germany are 34% to 39% lower than for comparative businesses in the UK of any size, while in France they are 31% less for small businesses rising to 53% for the very large.”5 On average, UK-based high energy users face much higher electricity prices than their EU competitors (£228/MWh in 2023, compared to £108/MWh in France and £148/MWh in Germany), although about 400 of the most trade-intensive UK industrial users also benefit from lower electricity prices due to Government policies. To tackle the issue, the Government is considering a full reform of wholesale electricity markets and is also planning further engagement with stakeholders as it looks to act on the specific issue of industrial electricity prices. 6 What is clear is that decarbonisation remains a major driver of future energy policy. The work that industry is already doing to drive efficiency, accelerate decarbonisation technologies and create smarter, more agile processes to align with rapidly evolving energy ecosystems, remains as relevant as ever.
So, what’s in store for major energy users?
The benefits of efficiency, performance, risk management, resilience and cost management are likely to remain. Every industry faces unique challenges, but collaboration can accelerate progress towards overcoming them. For example, the Energy and Trade Intensive Industries (ETIIs) scheme (October application round) remains active7 and gives businesses the opportunity to access reduced electricity costs through exemption for green surcharges.
The next round of the Industrial Energy Transformation Fund, 8 which was set to run until 2028, is yet to be announced. This initiative helps businesses undertake feasibility studies and introduce technologies that can help to reduce their fossil energy use. Plans for the British Industry Supercharger scheme (set out by the last Government) are also still to be confirmed. 9 For major energy users, detail is needed on future Government support initiatives, as policy undergoes consultation ahead of firm strategies being announced next year. In the meantime, businesses would benefit from continuing to harness the power of data and technology to drive operational performance and energy efficiency and sharpen procurement practices to optimise value and de-risk their strategies. As the public and private sectors work to de-risk and invest in energy infrastructure. there is much to welcome in 2025, including the promise of improved access to grid connections and continued innovation in decarbonisation technologies. Shell Energy has experience in helping businesses navigate this complex energy landscape and supporting our customers to meet their evolving energy needs with confidence. With a range of solutions and dedicated support, we work with businesses to manage energy costs and build a better energy future. You can learn more about our energy products for businesses here.
2 https://www.neso.energy/publications/clean-power-2030
5 https://www.gov.uk/government/statistical-data-sets/international-industrial-energy-prices
8 https://www.gov.uk/government/collections/industrial-energy-transformation-fund
9 British Industry Supercharger scheme
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