A New Era for Energy: What 2024 Taught Us About the Future of Power

The UK energy landscape in 2024 was marked by significant change, with businesses and households alike navigating a market shaped by shifting supply sources, evolving regulatory frameworks, and ambitious decarbonisation

goals. For businesses, these shifts presented both challenges and opportunities, offering a glimpse into what the future of energy might hold.

As the energy sector pushes toward net zero, understanding key trends in production, consumption, and policy is essential for businesses looking to reduce costs, manage risk, and align with sustainability goals. Here’s a closer look at how the UK energy market evolved in 2024 and what it means for businesses heading into 2025.

A Shift Toward Renewables and Self-Sufficiency

One of the most striking developments of 2024 was the continued shift away from fossil fuels toward renewables. Renewable energy accounted for 46.4% of the UK's electricity generation, with significant growth in offshore wind and solar power. Despite less favorable weather conditions, increases in capacity helped sustain growth in the sector. Meanwhile, coal-fired power stations continued to be phased out, and nuclear power’s contribution declined, underscoring the transition to cleaner sources.

For businesses, this shift means greater access to green energy contracts, Power Purchase Agreements (PPAs), and opportunities to integrate on-site generation like solar panels. As renewable capacity increases, there’s also potential for greater price stability, as renewables are less exposed to international market volatility compared to fossil fuels. Companies should consider exploring direct renewable energy procurement options, such as PPAs, to lock in long-term energy rates and support their sustainability goals.

Energy Demand: Smarter Use, Lower Consumption

Total energy consumption in the UK fell by 2.9% in 2024, reflecting a combination of warmer weather and greater energy efficiency. For businesses, this drop signals a growing trend toward smarter consumption, with many companies leveraging digital tools to monitor and reduce usage.

The rise of smart meters and energy management systems has enabled businesses to gain real-time visibility into their energy consumption. These tools help companies optimise usage during peak demand periods, avoid costly surcharges, and achieve greater operational efficiency. Companies that manage their consumption flexibly may be able to unlock further savings, particularly with the emergence of "low-standing-charge tariffs" that favor businesses with more variable energy use.

Businesses should review their energy management strategy by installing smart meters and leveraging demand-side response schemes. Flexible tariffs that align with consumption patterns can provide additional cost-saving opportunities.

Energy Security and Supply Chain Shifts

As global energy markets face ongoing uncertainty, the UK’s reliance on imports has become a key factor in its energy strategy. In 2024, imports accounted for 40.8% of the UK’s energy supply, with natural gas imports from Norway and liquefied natural gas (LNG) from the United States playing a major role.

While the UK was a net exporter of electricity in 2022, 2024 saw it revert to being a net importer due to reduced nuclear capacity and greater reliance on European grids. This shift highlights the growing complexity of energy supply chains and the potential impact of geopolitical events.

For businesses, supply chain risk is a critical consideration. While reliance on renewable energy reduces exposure to fossil fuel price shocks, import dependency for gas and electricity exposes businesses to the risk of supply disruptions. Companies can build energy security into their risk management strategy by diversifying energy sources, exploring energy storage solutions, or considering on-site generation to reduce reliance on external suppliers.

Investing in Energy: Capital Flows Toward Renewables

Investment in the UK’s energy infrastructure totaled £18.5 billion in 2024, with electricity projects accounting for 56% of total investment. Much of this funding was directed toward renewable energy capacity, grid upgrades, and storage technologies. Investment in oil and gas extraction also rose, reflecting efforts to maintain production amid the energy transition.

These investment trends shape the opportunities businesses have to reduce their carbon footprint. As more funding flows toward renewable energy, companies can expect better access to cleaner, more affordable energy. Aligning operations with this shift may open up access to green finance and sustainability-linked loans. Demonstrating energy efficiency, carbon reduction, or sustainability leadership can enhance access to finance, as banks and investors increasingly prioritise companies with strong environmental credentials.

Carbon and Sustainability: Pressure to Act Intensifies

The UK’s carbon emissions fell by 6.6% in 2024, continuing a downward trend that has been accelerated by the shift to renewables. However, the regulatory environment is becoming more stringent, with companies facing new reporting obligations and pressure from stakeholders to decarbonise their supply chains.

Businesses are under greater scrutiny to reduce their carbon footprint, particularly as reporting requirements tighten. From ESG (Environmental, Social, and Governance) demands to investor pressure, sustainability is no longer a "nice-to-have" — it's a business imperative. Companies should prepare for tighter reporting standards by conducting carbon footprint assessments and establishing decarbonisation roadmaps to stay ahead of evolving regulatory requirements.

Looking Ahead to 2025

The events of 2024 highlight a pivotal moment for UK energy. The growth of renewables, the evolution of energy tariffs, and the shift toward energy security present both challenges and opportunities for businesses. Here’s what to watch for in 2025:

• Energy Storage Growth: Expect to see wider adoption of battery storage, which will enable businesses to store cheaper energy for use during peak periods.

• Carbon Reporting Requirements: Businesses will face tighter rules on carbon reporting, with stronger emphasis on supply chain emissions.

• More Flexible Energy Tariffs: The rise of low-standing-charge tariffs could provide businesses with more options for controlling costs.

Final Thoughts

2024 was a year of transformation for the UK energy sector. For businesses, the changes present a strategic opportunity to become more efficient, sustainable, and resilient. By embracing renewable energy, optimising energy use, and preparing for regulatory changes, businesses can turn energy challenges into growth opportunities. The future may be uncertain, but businesses that act now will be better prepared for the road ahead.

Want to future-proof your energy strategy? Start by exploring green energy procurement, smart energy management, and decarbonisation strategies. Small changes today can deliver big benefits tomorrow.