Market Insight Report UK's new energy transition phase

UK electricity use on the rise

UK electricity use has been declining for several years, with a decrease of about 10% from 2018 to the end of 2024. This decline is mainly due to better energy efficiency, economic changes like de-industrialisation, the growth of on-site generation, and high electricity costs during the energy crisis.

However, recent consumption data shows that electricity demand is beginning to trend upward and is expected to rise by 50% by 2035 as forecasted by National Grid in its future electricity scenarios analysis ¹. 

In Q1 2025, estimated total electricity use (including imports) rose to 78.1TWh, the highest first-quarter demand since 2019.

This increase follows a rise in 2024, likely driven by energy-intensive technologies and digitalisation.

UK electricity consumption over the past 10 years (left) and Q1 for the past 10 years (right) 

Source - Energy Dashboard

A PwC survey found that 89% of UK businesses used more energy than ever in 2024, with 83% expecting further increases in 2025 ². This reflects the rising influence of automation, AI-powered systems, and data-driven operations.

Factors contributing to higher energy use include business expansion, increased transportation and supply chain costs, and changing weather patterns.

Technology is now the main driver of energy demand, signalling a shift from declining consumption to increasing demand, primarily due to advancements in AI, automation, and electrification.

In the medium to long term, demand for electricity is set to increase as the UK works towards decarbonising the economy. Key sectors, such as heating and transport, are likely to play a significant role in this transition.

Gas-fired electricity generation compensates for renewables dip

Renewable generation made up 46% of the UK’s electricity mix in Q1 2025, down 6% from the same period in 2024. The decline was mainly due to a 15% year-on-year drop in wind generation, its lowest level since 2021.

With less wind power produced, this triggered a sharp increase in gas-fired generation, making Q1 2025 the highest quarter for non-renewable electricity since 2021.

Renewables share of the UK power mix past 10 years – not including imports (TWh & %)

Source - Energy Dashboard

Wind has a challenging start to the year

Wind power generation started the year on a challenging note. Wind output totalled 21.3 TWh, the lowest for Q1 since 2021, due to weak wind and sunlight reducing renewable production. As a result, wind's share of the electricity mix fell to 27%.

Despite this decline, curtailments were still necessary during high-wind events. On January 24th, Storm Eowyn led to ~1.8GW of wind power being curtailed ³. Without these constraints, wind output could have been 15% higher.

The highest half-hourly bid volume of around ~8.3 GW was recorded on March 5, underscoring ongoing grid integration challenges. These trends emphasise the need for improved grid flexibility and storage solutions to manage fluctuations in renewable energy.

Power generation by fuel type for Q1 past 10 years (TWh & %)

Source - Energy Dashboard

Solar crosses 18GW capacity milestone

The UK’s solar capacity has reached 18GW, with 1,735,000 installations completed as of February 2025, marking a 6.8% increase (1.1GW) since February 2024 ⁴ .

While domestic solar installations dominate in volume, they contribute only 30% of total capacity. Ground-mounted and standalone solar installations make up approximately 55% of the total, with 7.71GW from such sources, including two solar farms with Contracts for Difference (CFDs), the Charity and Triangle solar PV power plants. 

Solar Media Market Research expects 3GW to 3.5GW of new capacity to be added in 2025, with 20% of 2024’s 2.3GW deployment coming from residential rooftop installations and another 20% from commercial rooftops ⁵.

UK solar deployment by capacity and segments

Source - DESNZ

UK energy outlook in 2025

The UK is set to break records in renewable energy generation this summer, with wind and solar output reaching new highs, continuing previous trends. While this potentially can lead to lower electricity prices, it also highlights the urgent need for better grid flexibility and storage to handle weather-driven fluctuations.

Ofgem’s latest grid reforms will aim to accelerate renewable deployment by removing stalled projects and enabling faster connections for impactful developments ⁷. Meanwhile, the SME climate hub survey has identified that more small and medium-sized enterprises (SMEs) are embracing sustainability as a core strategy ⁸. However, despite progress, SMEs have voiced that financial and policy barriers remain an obstacle in scaling their climate efforts.

With growing renewable capacity, regulatory improvements, and increased business commitment, 2025 is shaping up to be a defining year in the UK’s clean energy transition.

Summary

The UK is entering a new phase in its energy transition, shifting from a decade-long decline in electricity use to a period of rising demand, with businesses using more electricity than ever.

In Q1 2025, renewables accounted for 46% of the UK’s electricity mix, a 6% drop from the previous year, mainly due to a 15% drop in wind generation. As a result, gas-fired power increased to 34% of the total, marking the highest level of non-renewable electricity since 2021.

Despite weak wind conditions, high-wind events still required curtailments, and grid flexibility issues persisted. Solar capacity reached 18GW, while imports totalled 9TWh, mainly from France and Norway. Hydro rose 44%, and nuclear hit a Q1 record 10.7TWh.

The UK anticipates record-breaking renewable generation this summer, highlighting the need for better grid flexibility and storage. Ofgem’s reforms aim to accelerate renewable deployment, while businesses increasingly adopt the energy transition despite facing financial and policy challenges.

In this article

• UK electricity use on the rise
• Gas-fired electricity generation compensates for renewables dip
• Wind has a challenging start to the year
• Solar crosses 18GW capacity milestone
• Imports
• Gas
• Hydro and Biomass
• Nuclear
• UK energy outlook in 2025
• Summary

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