This is a best prospect industry sector for this country. Includes a market overview and trade data.
In 2021 the UK energy industry supported over 700,000 jobs and invested $14bn into the UK.
The UK has an electricity generating capacity of some 76 GW with the following mix: 43.1% renewable, 35.7% gas, 16.1% nuclear, 1.8% coal and 3.3% other.
The UK’s determination to become a low carbon economy creates many opportunities for U.S. companies to supply products and services that will help implementing sustainable, secure, low carbon energy sources.
The maturity and competitiveness of the UK energy market typically make product quality and performance, delivery timescales and costs key to market acceptance. Investing time and resources in getting to know the key stakeholders and establishing solid relationships is essential for succeeding in the UK energy market.
Nuclear: Strong political support and plans for expansion mark the UK as a significant opportunity for U.S. civil nuclear exports. Prospects for services beyond new plant construction, particularly decommissioning and advanced reactor development, remain positive and growing. Robust foreign competition and financing are the chief obstacles for U.S. industry. The UK has privatized power generation and liberalized its electricity market, which together make major capital investments problematic.
The United Kingdom has 11 nuclear reactors currently in operation. Nuclear energy avoided 22.7 million metric tons of CO2 emissions in the UK in 2021– this is the equivalent of taking around a third of all cars in the UK off the road. All but one of the operating reactors are scheduled to be shut down by 2030, but the United Kingdom has plans to bring new plants online by 2026 to offset some of the expected loss in nuclear generation. No restriction on foreign equity is in place. The country also has full fuel cycle facilities from fuel manufacture and reactor operation through to reprocessing and recycling of nuclear materials followed by dismantling and decommissioning. The Nuclear Decommissioning Authority (NDA), established to supervise decommissioning and clean-up work, currently spends approximately $3.7 billion annually on decommissioning.
Smart Grids: The UK has quickly developed into one of the most attractive markets in the world for advanced smart grid technology and applications. Thanks to a highly competitive electricity sector and recent efforts by the government and regulators, the UK market offers many prospects: UK public and private organizations are investing in grid upgrades, creating significant business opportunities for U.S. companies that have developed innovative products, services or technologies related to the smart grids ICT segment. Increasing demand, constrained supply, emphasis on energy security and challenging carbon reduction targets driving transformation in energy and utilities and smart grid technologies will play a key role in this space.
Energy Storage: Total installed capacity of utility-scale storage in the UK is now approaching 1.7 GW across 127 sites, with an additional record-breaking 27GW are in the pipeline.
Existing plants’ life extension & New Build: Existing nuclear plants are all owned and operated by EDF Energy, a wholly owned subsidiary of the EDF Group (headquartered in France), one of Europe’s largest energy groups. EDF Energy spends about $800 million per year on plant upgrades to enable ongoing operation. EDF Energy is building two Areva (France) European Pressurized Reactors (EPRs) at Hinkley Point, Somerset. Construction at Hinkley Point started in 2018, and EDF plans to have the first of these new reactors grid-connected by 2027. The project is valued at $25-27 bn. Hinkley Point is a joint venture of EDF (66.5%) with China General Nuclear Corporation (CGN) (33.5%). The UK government is also planning to build two new EPR’s at Sizewell C in Suffolk, with FID expected by the end of 2023. Major U.S. engineering companies (Bechtel, Jacobs, GE through Alstom acquisition) are involved in the project, even though their scope is rather limited. Bechtel & WEC are also looking at developing a three-unit AP1000 plant at the Wylfa nuclear site. In the Ku’s most recent Comprehensive Spending Review, the UK announced the $147 million Future Nuclear Enabling Fund in April 2022, with plans to realize up to eight additional nuclear reactors under the government’s British Energy Security Strategy.
Small and Advanced Modular Reactors: The UK government has laid out its commitment to developing and deploying advanced nuclear technologies by providing approximately $75 million for R&D for advanced modular reactors (AMRs) and setting out a new framework to support the development and deployment of small modular reactors (SMRs) by 2029. U.S. SMR and AMR technology providers have an opportunity to expand into the UK market.
Decommissioning: The NDA owns 19 nuclear sites across the UK and is responsible for delivering the decommissioning and clean-up of the UK’s civil nuclear legacy. It aims to do this by introducing innovation and contractor expertise through a series of competitions. For the supply chain, decommissioning is a significant market: the United Kingdom plans to shut down fourteen reactors by 2030 and currently spends approximately $3.7 billion annually on decommissioning. All major U.S. engineering companies are involved (including Bechtel, Jacobs, AECOM, Fluor)
The development of the UK smart grid is creating opportunities for traditional energy infrastructure vendors while opening the market to new players. Traditional vendors will benefit from large-scale renewal of utility assets as customer and grid applications are deployed and will be able to differentiate their product lines through increased functionality and integration with other smart technologies. New players – IT providers, networking and telecommunications companies, and systems integrators – will benefit from major technology investments.
Target sectors holding high potential for U.S exporters include:
- Smart meters and advanced metering infrastructure
- Communication and data management software
- Grid optimization and automation technologies
- Demand response and control systems
- Energy management for distributed generation and storage
- Cyber security software and services
- Consumer engagement platforms and services
Purchasers of U.S. smart grid goods and services include generation, transmission, and distribution companies. The UK gas and electricity market is unbundled (non-vertically integrated), and the major stakeholders involved in the implementation of smart grids include:
Suppliers: British Gas, EdF Energy, E.ON UK, RWE Npower, Scottish Power, and SSE (these six organizations are known as the “Big 6” and control 70% of the energy retail market).
Transmission networks operators: Cadent Gas (controls half of the eight regional transmission networks) National Grid (controls the national gas transmission network), Scottish Power Transmission, Scottish Hydro Electric Transmission and Northern Ireland Electricity; and
Distribution networks operators: Electricity North West, Northern Ireland Electricity, Northern PowerGrid, SP Energy Networks, SSE Power Distribution, UK Power Networks, and Western Power Distribution.
The Energy Networks Association Smart Networks Portal lists the various UK smart grid projects and is a good resource to find information about the major players (potential buyers and partners for U.S. companies) involved in this space.
Energy storage is a high priority for the UK government and a key component of its push towards a net zero carbon economy.
The UK has the largest installed capacity of offshore wind in the world; however, because the availability and speed of wind is not constant, energy can sometimes be produced when it is not needed and then lost. Batteries and other energy storage methods are vital for maintaining consistent supply from renewable sources, which naturally fluctuate over hours, days, and weeks. They help grid operators finely balance the supply of electricity to meet demand, and provide extra resources when needed, such as for frequency response.
Major developers of UK energy storage projects include Anesco, EDF, Pivot Power, Statera, and RES, with each company active in several power supply and flexibility markets, providing services to National Grid and Distribution Network Operators (DNOs), as well as operating in the wholesale energy markets.
- World Nuclear Association Symposium, London
- Energy Innovation Summit, Glasgow
- Nuclear Industry Association
- Energy Networks Association
- Government Departments
- Department for Business, Energy & Industrial Strategy
- Nuclear Decommissioning Authority
- Oil & Gas Authority
For further information, please contact:
U.S. Commercial Service
Tel: +44 (0)20 7891 3443