Future energy system explained

This page provides an overview of how renewables, clean energy and electrification are changing our energy system, and what you need to know.

Why is the UK's energy system changing?

Since the turn of the century, the UK has been transitioning from using fossil fuels to using clean, renewable alternatives to supply our power. This process began to meaningfully accelerate in the last 15 years, with the Government outlining targets to achieve a clean power system by 2030 and net zero by 2050. In 2024, we became the first G7 country to phase out coal-fired power generation, with wind also generating more electricity than gas for the first time.

However, this new low carbon energy system requires fundamental changes to the way we design the physical network and how we manage the flow of energy around it. From storing energy in order to manage the peaks and troughs of wind generation, to expanding our network to transport power from renewable sources to where it is needed for homes and businesses, it is vital that we continue to innovate whilst also creating economies of scale for the technologies that help connect and enable our future system.

What will the future energy system look like?

The UK’s future energy system will be clean, decentralised and resilient. Powered by a diverse range of renewable sources such as onshore and offshore wind, generation will come from a wide range of locations across the country, rather than a small number of fossil fuel generation plants, with data and automation used to improve efficiency and stability by matching demand with supply in real time.

How much progress has been made so far? 

Since the turn of the century, the UK has been at the forefront of the worldwide energy transition, with a particular acceleration of development in the last 15 years. Renewables now provide around half of our electricity each year, while coal-fired power generation has been phased out and our reliance on gas continues to decline. As a result, in 2024 the ’carbon intensity‘ of power generation averaged just 124g of CO₂ per kilowatt hour (kWh), compared with 419g of CO2 per kWh in 2014. 

The Government’s energy strategy has focussed on expanding offshore wind, with a target to deliver up to 60GW by 2030, including 5GW of floating offshore wind, in addition to revitalising onshore wind development in England, expanding and modernising our grid network, as well as enabling long and short duration energy storage, and supporting the development of green hydrogen as a source of flexible power and a means to decarbonise industry. 

The charts below show just how much of the UK's electricity is being generated by renewables, and wind in particular.

What are the key challenges to realising the future energy system?

Renewable energy is low cost and abundant, but it is also largely dependent on certain weather conditions. Whether it be wind or sun, the volume of generation on a given day can vary, with this variability needing to be managed through the deployment and operation of long and short duration storage to soak up power when it is abundant and released when it is needed. The biggest opportunity to address prolonged periods of low wind generation is through green hydrogen, where water is converted to hydrogen using renewable electricity, stored, and then used as a flexible power source when the system requires it. 

There is also the question of ‘inertia’, which helps to maintain the frequency of our grid and provide the required stability for the system to safely operate. Historically, this has been supplied by the spinning present in coal, gas, or nuclear plants, with renewable energy sources not typically providing natural inertia. Developing solutions to provide ‘green inertia’, by mimicking the stabilising effects of tradition power stations, as well as utilising battery storage projects equipped with grid-forming inverters, will be crucial to ensure the resilience of our future renewables-dominated energy system. 

Finally, there is the need for modernising and expanding the grid network. Put simply, our national grid was not originally designed for a decentralised and renewable system, given back in the 1930s more than 90% of our energy came from burning coal. To ensure we can both connect to and transport energy from our rapidly growing sources of clean energy, we’ll need to install around three times more transmission infrastructure across England and Wales in the next decade than we have over the last 30 years. 

Technologies to support the future energy system

What are the options for storing energy?

There are a number of short and long duration energy storage technologies, ranging from batteries to green hydrogen and pumped hydro. These technologies can store power from minutes and hours to across seasons, and they will play a critical role in capturing renewable energy when it is abundant, before releasing it when it is needed to service demand and provide stability at times of lower generation. This latter function is known as ‘system balancing’ and refers to the real-time coordination of the supply and demand for electricity to ensure the reliability of the power grid. 

What is green hydrogen, and what role will it play?

Green hydrogen is created by using renewable electricity to split water into its components of hydrogen and oxygen, via a process of electrolysis. The hydrogen is then captured, ’dried’, and pressurised so it can either be transported, stored for future use, or used immediately. No fossil fuels are used in the process, meaning no emissions are produced. 

Green hydrogen is valuable both as a means to store power and address periods of intermittent generation, as well as to enable the decarbonisation of industries such as manufacturing, shipping and aviation, which are uniquely difficult to electrify. However, there are a number of current challenges to scaling it up, including high production costs, insufficient storage infrastructure, the lack of a dedicated pipeline network for its transportation, and the absence of economic demand incentives for many industries to adopt it at scale. 

What are interconnectors and how do they help?

Interconnectors are high-voltage cables connecting the UK’s grid to the grids of other neighbouring countries, such as France and Norway. They facilitate the import and export of electricity, help balance supply and demand across wider international regions, and provide countries with an added layer of energy security.

The Government has recently signalled its intention to progress talks with the EU to link our respective Emissions Trading Schemes (ETS) and ensure they are aligned, which will help to drive down the cost of electricity in the years ahead by stabilising prices and reducing trade friction, particularly around the clean electricity generated in the North Sea and transported via interconnectors between countries.

How will data and digitalisation support the energy transition?

Digital tools will be crucial to the stability and resilience of our future energy system, enabling us to monitor energy flows in real time, continuously matching supply and demand to ensure overall balance, whilst dispatching low carbon and flexible sources of power such as long and short duration storage technologies. ‘Digital twins’ and AI-powered tools will also allow operators to simulate grid conditions and pre-empt bottlenecks, whilst detecting faults and rerouting power automatically when required.

Such tools will also empower consumers, both by allowing them to monitor, adjust and reduce their energy use, as well as by lowering prices through minimising our reliance on expensive gas and fossil fuels as back up sources of energy.

What are Virtual Power Plants?

A Virtual Power Plant (VPP) is a network of energy resources, such as wind turbines or battery storage projects and demand assets, which are digitally connected and coordinated to act as one. By combining a number of smaller clean energy sources and demand assets, a VPP has similar characteristics to the conditions of a traditional large power station, thereby simplifying the flow of electricity and the ease with which it can be managed to respond to market signals and the needs of the grid.

Typically, each device is geographically spread with no sharing of grid infrastructure, but rather virtually connected, both operationally and commercially. Each asset is optimised against spot prices to maximise its individual value, with wind farms forecast based on live data from the VPP with a view to reducing balancing costs and switching off when the power price is negative. Batteries are traded against spot prices and future price expectations, before being re-traded.