Clean Power 2030: what it means for businesses and consumers

The Government’s ambitious Clean Power 2030 commitment has sparked debate across industries and households alike in recent months.

The pledge to generate 95% of the nation's electricity from clean sources by 2030 is undoubtedly a step in the right direction for tackling the climate crisis and embracing a sustainable and secure energy future. But while the environmental benefits are clear, what does this massive shift mean for businesses, particularly those consuming significant amounts of power?

Let's break it down and explore the cost implications, as well as what businesses can expect as the UK steers toward a greener energy landscape.

A bold vision for a cleaner future

The UK's Clean Power 2030 plan is unprecedented in scale.

Gas-fired power plants contribute just over a third of the nation’s electricity but by the end of the decade the Government aims to reduce that figure to less than 5%. To replace this gas-generated power, the UK will need to rapidly expand renewable energy sources, with a focus on offshore wind.

That focus on offshore wind is designed to hit a massive 50 gigawatts (GW) of capacity by 2030 – up from the 15GW of offshore wind in operation today. This means the UK must add as much new offshore wind capacity in the next two years as has been installed over the last six years.

Alongside this, solar energy capacity is set to triple. The sheer scale of this transition is something never before seen in the UK’s energy history.

The £60 billion question

Such a transformation requires more than just new energy sources; it demands a complete overhaul of the UK’s infrastructure. A key part will be the expansion of the nation’s electricity grid. In the next five years, about 5,500km (3,400 miles) of new grid capacity will be needed – double the distance of what has been built in the past decade. This will see a total lifetime recovered cost estimated to be around £60 billion.

Although it’s important to recognise this investment is essential for ensuring reliable, sustainable power for the future, we need to recognise that businesses and consumers will eventually bear this cost through their bills.

Will clean power 2030 lower energy bills?

While Clean Power 2030 is undoubtedly a positive step for the environment – and also reduces the UK’s reliance on fuel imports – the reality is businesses may not see a reduction in energy prices, at least not in the short term. The increasing share of renewable power will not immediately lead to lower wholesale prices, as gas will continue to influence energy pricing for the near future.

 And with more renewable generation coming online, the ability to trade electricity without causing a major change in its price – and without incurring significant transaction costs – is expected to decrease, making it harder for businesses to hedge future energy prices. As a result, businesses may face more volatility in energy pricing, especially as weather-dependent generation becomes more of a feature throughout the year.

Understanding the dynamics behind non-energy and commodity costs is crucial for businesses looking to navigate this evolving energy landscape. As we move toward Clean Power 2030, businesses must stay proactive in managing their energy consumption and purchasing strategies.

:: You can read the article in full here: Understanding the true cost of clean energy for UK businesses as well as registering to receive nBS’s forthcoming Future Energy Costs Guide due for release in early May, which explores practical steps businesses can take to reduce exposure to rising energy costs and embrace the opportunities presented by the green transition.