In the past month, the UK has submitted its Nationally Determined Contribution (NDC) target to reduce greenhouse gas emissions and has received recommendations from the Committee on Climate Change (CCC) on how to achieve wider decarbonisation goals through the Seventh Carbon Budget. This month’s Bryt Insight provides an overview of this, alongside other key developments in the energy industry and how businesses can get involved in the wider energy transition.

From exciting developments in renewable energy to the potential of industry electrification, here’s what you need to know this month:

Annual wholesale electricity prices continued the climb that was seen at the end of January, hitting the highest prices seen since December 2023 on the 10^th February, before falling to levels not seen since pre-Christmas last year, around February 26^th. They then rose slightly as the month ended.

Gas has been the main driver for the increase, as electricity prices are largely affected by gas prices. Gas prices reached a two-year high around the 10^th February, before falling towards the end of the month. Gas storage across the EU also remained below the average for this time of year, which stopped gas prices from falling further.

The tentative steps we saw towards a ceasefire in Ukraine had a calming effect on the markets in the middle of the month. However, tensions between the United States and Ukraine recently have added uncertainty to the market, due to risk regarding the availability of gas.

Planned changes to the UK carbon market, which is a mechanism that makes large CO₂ (carbon dioxide) emitters report on and pay for their emissions by purchasing allowances, have stalled and prices have decreased slightly. Last month, the UK carbon market prices inflated electricity prices, because the UK Government was looking to potentially mirror the higher EU carbon prices. However, there have been no new updates about this since and, therefore, the carbon market did not impact wholesale electricity prices this month.

The start of the month saw reasonably stable day-ahead prices, due to consistent wind and nuclear generation. Towards the end of the month, demand reduced because of warmer weather and shorter nights. Coupled with increased wind generation and the return of the Eleclink interconnector in France (which has been out of service since September), day-ahead prices fell to levels last seen at the end of 2024. Nevertheless, they did increase again at the end of the month, along with gas and long-term electricity prices.

Looking ahead, wholesale electricity prices look like they may decrease, due to a range of factors. These include electricity demand and gas prices lowering from the highs at the start of the year, and the return of nuclear plants and interconnectors following outages, boosting supply availability. Also pointing towards a decrease in prices is the reduction in the cost of allowances in the carbon market, both in the UK and the EU, and European coal dropping to its lowest price in a year (which impacts the UK through interconnectors).

However, the UK and EU Liquified Natural Gas (LNG) prices fell below the Japan-Korea Marker (JKM), meaning that, in the short-term, LNG cargoes may start to flow towards Asia rather than Europe. This, along with the below-average levels of gas storage for this time of year in the EU, are indicators of upward pressure on the prices.

Overall, prices are leaning more towards reducing in the short term, but any movement in the Ukraine conflict could alter the markets either way.

The prices for Renewable Energy Guarantees of Origin (REGO) certificates for all compliance periods have decreased again this month. The REGOs for the compliance year ending 31^st March 2025 have dropped significantly on the back of a surplus of renewable certificates available in the market. Prices for all future compliance years have also come down and are at similar levels, but have not reduced by as much as the current year.

A new nuclear Regulated Asset Base (RAB) levy has been confirmed by the UK Government and Ofgem to be introduced at a future date, which means that UK businesses will see an additional charge on their electricity bills¹. Working in a similar way to the Contracts for Difference scheme (CfD), this charge seeks to support the development of Sizewell C, a nuclear power station project located in Suffolk, and might eventually support other nuclear projects also.

The charge will apply to all electricity consumers by their electricity suppliers as part of this Government scheme, but Energy Intensive Industries (EII) are likely to be exempt. The date for the implementation of this charge, however, is not yet confirmed.

For our customers, you can find out more about how this charge may impact you in our FAQ, here.

The UK Government has confirmed its Nationally Determined Contribution (NDC) target, which commits the country to cut greenhouse gas emissions (GHG) by 81% by 2035, compared to levels seen in 1990². Signatories of the Paris Agreement – an international treaty addressing climate change – are to submit their NDCs to the United Nations Framework Convention on Climate Change (UNFCCC) every 5 years. However, at the recent February deadline, 95% of countries had yet to submit their targets³. As part of the 5% of countries that have submitted an NDC on time, the UK Government’s commitment to rapidly reduce emissions is a positive step forward and represents its intention to become a global climate leader.

Following the submission of the NDC target, the Government’s independent advisor on climate change, the Committee on Climate Change (CCC), have published their recommendations in the UK’s Seventh Carbon Budget⁴. These recommendations outline how the UK should reduce their GHG emissions between 2038 and 2042. Carbon Budgets act as guidelines for how to achieve a limit on GHG emissions across various sectors in a five-year period, with the objective of reducing emissions year-by-year to hit national targets.

The CCC has advised that the UK must reduce emissions by 87% by 2040, from a 1990 baseline, if they are to achieve net zero by 2050. Due to the electrification of key sectors and the decarbonisation of the UK’s electricity mix, a 50% reduction in emissions compared to 1990 levels has already been achieved. However, the CCC emphasises that all sectors will need to decarbonise at unprecedented rates in order to reach net zero.

They have set out a ‘Balanced Pathway’ to help the UK achieve this, outlining economic, social and technological considerations for the Government, including continuing to electrify industry, heat and transport, as well as a focus on nature restoration. The CCC estimates that the net costs of decarbonisation using the ‘Balanced Pathway’ will be 0.2% of the UK’s GDP annually, due to initial costs that will be offset by savings in the long-term.

If you would like to read more about the CCC’s Seventh Carbon Budget, you can visit here.

A new report from the manufacturers organisation Make UK, in partnership with commercial energy and sustainability advisor Inspired, outlines how a clear energy procurement strategy can help businesses protect themselves from volatile energy prices. The report calls attention to the financial benefits businesses can see by establishing a strategy and outlines the steps they can take to create one.

Its findings warn against businesses becoming complacent, advising them to take action by creating and revising their energy procurement strategy, in order to prepare against the impact of potential future energy crises, such as what was seen in 2022. Make UK explains that, in 2022, the UK’s reliance on foreign energy sources exacerbated the issues the country was already facing, such as an underinvestment in renewable infrastructure – which would have provided energy that could have limited the UK’s dependence on external energy sources. While energy costs have reduced from those seen in early 2022, the report points out that many businesses are still struggling to meet their energy needs. The report advises working with transparent and high-quality energy consultants and suppliers to assist them in securing the best contracts and ensuring a better understanding the energy landscape.

The report also states that regular reviews of your business’s energy procurement strategy is essential and will ensure, going forward, that risks are aligned with changing business needs and that your strategy is robust. Positively, the report highlights that the majority of manufacturers, 81%, do have an energy procurement plan already in place, and that two out of three have revised their plan since 2022.

To find out more about the report, Energy Procurement: The Cost of Complacency, visit here⁵.

New report advocates for more support for industrial electrification

A new report has been published by Green Alliance, exploring the potential of electrification to decarbonise industry, as opposed to more complex solutions like carbon capture⁶. The report argues that electrification is an energy-efficient solution that will increase grid flexibility and provide price stability, highlighting industrial heat pumps, electric boilers, electric furnaces and microwave ovens as quick and efficient electrification solutions to implement. Rather than incentivising businesses to install fossil fuel technology with access to carbon capture, the report suggests that the UK Government incentivises the implementation of electrified versions of these assets, which can then be powered by renewable electricity.

The report also spotlights several UK industrial sectors (such as steel and iron, chemicals, food and drink, glass, ceramics, and more), examining their suitability for electrification and the challenges they may face. Other European countries are used as examples of nations that have supported policies to increase the electrification of industry, from which we can learn more about how to unlock the untapped potential of industry electrification.

Nevertheless, the report notes that there are three main challenges in electrification, which will require a coordinated effort across the UK Government, industry and regulators to overcome:

• In order to cut industrial electricity costs, the report suggests an electrification Contract for Difference (CfD) scheme and a widening of the British Industry Supercharger (which provides support to align energy costs for key industries with other major economies).
• Additionally, the report suggests shifting levies from electricity bills to progressive taxation (increasing the tax rate according to the taxable amount), which would cut bills for industry and consumers.
• The report also suggests increased support and guidance for businesses in their decarbonisation journey, such as a dedicated advice and support service.
• To accelerate grid upgrades, the report suggests more investment, improvements in spatial planning, and increased research to address barriers in infrastructure development.

In working to overcome these barriers, the report states that the UK will be able to unlock the full potential of industry electrification, assisting the country in its journey to net zero.

The Clean Industry Bonus application window is now open

In order to support job creation and development alongside renewable energy manufacturing, the UK Government have launched the Clean Industry Bonus⁷. This bonus will offer financial support to offshore wind developers who prioritise investment in areas where it is most required. This includes in communities that have previously been reliant on the oil and gas industry, as well as those supporting jobs that are highly skilled, such as engineers, electricians or welders. The application welcomes developers that are looking to recruit highly skilled workers, as well as those that are developing low-carbon factories, offshore wind blades, cables and ports, in order to decrease industrial emissions across the renewable energy supply chain.

The initial £27 million per gigawatt for offshore wind projects will be awarded competitively, and will be applied through the CfD mechanism. The bonus aims to accelerate the drive for renewable energy, and support developers who are providing the infrastructure required to reduce reliance on fossil fuel and keep energy bills down.

To find out more, visit here.

Integrating offshore wind with flexibility

A new report from RenewableUK explores the potential of reforming the planning system to focus on integrating the deployment of offshore wind farms with green hydrogen and battery storage projects⁸.  Aligning wind farms with battery or green hydrogen assets would increase flexibility and prevent wind curtailment – the planned powering down of renewable projects when there is excess generation, such as on the windiest and sunniest days, and low demand.

At present, only 3MW of operational battery storage is co-located with UK offshore wind farms. It will be essential to increase projects like this in order to utilise growing wind generation – especially in Scotland, where future offshore wind development is expected to exceed demand.

Operational offshore wind capacity increases by 15% globally

Global operational offshore wind capacity has increased by 15% compared to a year ago, reaching 80.9GW, according to RenewableUK’s newest Offshore Wind EnergyPulse Insights report⁹. 63% of this new capacity came from China and the Netherlands. China also currently has the largest project pipeline, with 247GW across 437 planned projects, while the UK follows in second place, with 96GW across 123 projects.

The number of projects for offshore wind farms has also increased globally in the last year, from 1,461 to 1,555, and the first offshore wind projects in Indonesia, Chile, and Malta were confirmed in 2024 – encouraging milestones for the future of wind energy!

The potential of solar carports for UK businesses

Ongoing research from RenEnergy has examined the untapped potential of solar carports – solar PV panels that sit on the roof of parking areas, allowing electricity to power businesses or the EV chargers below. This could generate 1.57GW of energy in the UK if the 546,500 suitable parking spaces the research identified have solar carports installed¹⁰.

These parking spaces range across hospitals, hotels, airports and sports centres, and RenEnergy states that there are hundreds of thousands more that could be utilised. Compared to the long planning process involved in developing large scale solar farms, RenEnergy highlights that small solar carports could receive approval in eight weeks, under permitted development with prior approval.

Solar carports and ground-mounted solar farms provide distinct benefits in the energy transition, and both serve different purposes. In the journey towards net zero, it’s important to utilise all the sustainable solutions available.

Well-managed solar farms can help biodiversity

In other solar-related news, new research from the RSPB and Cambridge University has found that ground-mounted solar farms can boost bird numbers and help wildlife, if they are managed responsibly¹¹. Solar farms that have a large mix of habitats and were created with nature in mind have been seen to have the greatest variety of species of birds, supporting nearly three times the number of birds as nearby farmland.

Addressing previous concerns about the impact of solar farms on wildlife, this research helps confirm that the UK can increase its development of solar energy, whilst simultaneously supporting nature.

The growth in global electricity demand expected to be met by low-carbon and renewable energy generation

A new report from International Energy Agency (IEA) has predicted that global electricity demand will increase sharply until the end of 2027, due to the electrification of buildings, transportation and industry, alongside the growth of air conditioning and data centres¹². The growth in electricity demand is expected to rise by 3,500 terawatt hours (TWh) across the next three years, which, according to the IEA, is the equivalent of adding Japan’s electricity usage per year.

In positive news, the report states that renewable energy is set to meet around 95% of this growth in demand in the next three years. Due to this expansion of renewable energy, alongside the lack of growth of fossil fuel-fired generation, carbon dioxide emissions from electricity generation are expected to plateau between 2025 and 2027.

Planning consent for Statkraft’s 39.9MW Kitland Solar Farm secured

Statkraft has officially secured planning permission for Kitland Solar Farm, which is a 39.9MW project in North Somerset. Maximising the potential of the renewable electricity produced at the solar farm, the planning consent also includes the inclusion of a Battery Energy Storage System (BESS), allowing energy to be stored and fed back into the grid at times of higher demand.

The environmental and social impact of the site has also been carefully considered. The planting of wildflower meadows and hedgerows on the site is predicted to create a 94% biodiversity net gain for habitats. Over 3.5 km of new public rights of way will be established within the site, and an orchard will be added that’s open to the community. Statkraft will work with nearby suppliers during the development of the project in an effort to support the local business community, and the site will contribute to an annual Community Benefit Funding. This is estimated to be worth £600,000 over the course of the site’s 40-year operational period.

Statkraft submitted its application for consent to North Somerset Council in May 2024, and construction will begin in 2027. To find out more, visit here¹³.

Statkraft compares Corporate Power Purchase Agreements (CPPAs) and Contracts for Difference (CfD) regarding negative pricing

Statkraft have published a new blog examining the increase of negative pricing periods in the UK in recent years. The blog also explores the favourability of Corporate Power Purchase Agreements (CPPAs), in comparison to Contracts for Difference (CfD), when it comes to negative pricing.

Negative pricing periods are caused by an imbalance in supply and demand, when there is too much energy being produced to be used, which means that consumers are essentially being paid to consume energy. This can create unpredictability and market exposure for suppliers and customers. In recent years, these periods have increased significantly in frequency – from 29 in 2022 to 176 in 2024.

CPPAs can bean alternative route to revenue for generators, where both the generator and the corporate agree a set price for the energy, and both agree to curtail the energy during negative pricing scenarios. This kind of long-term price security is essential for renewable generators, especially those which are ‘new-to-earth’ – and CPPAs ensure this security without contributing to more negative pricing periods, therefore supporting the grid.

You can read Statkraft’s full blog, here¹⁴.

If you have any questions on how any of the updates might affect your business, our team of experts is on hand to answer them. You can get in touch with us on 0330 053 8620 or at heretohelp@brytenergy.co.uk.