This is a best prospect industry sector for this country. Includes a market overview and trade data.
The UK has a thriving energy market with over $18bn invested in the sector over 2019. The energy sector created over $130bn in economic activity during the same period. The energy sector supports 738,000 jobs across the UK - equivalent to 1 in 49 jobs in the UK.
The UK has an electricity generating capacity of some 88 GW with the following mix: 40.6% gas, 37.1% renewable, 17.3% nuclear, 2.1% coal and 2.8% other.
The UK’s determination to become a low carbon economy (in 2019 the UK became the first major economy to legislate for net-zero emissions by 2050) 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 relationship is essential for succeeding in the UK energy market.
- Nuclear: Political support and plans for new nuclear builds — potentially large-scale gigawatt plants and small modular reactors —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 challenging.
- The UK nuclear energy sector generates roughly 15% of the UK’s electricity. Almost half of this capacity is to be retired over the next five years and all but one existing reactor will be retired by 2030. The first new-generation large-scale nuclear plant is expected to be online before the end of the decade at Hinkley Point and the UK government has committed funding support for Rolls Royce’s small modular reactor design. There are no restrictions on foreign equity. 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), which was established to supervise decommissioning and clean-up work, will be spending around $4.5bn over the next couple of years.
- 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: More than 16.1GW of battery storage capacity is operating, under construction, or in the pipeline across 729 projects in the UK: 1.1GW of battery storage capacity is operational, a further 0.6GW is under construction, 8.3GW of capacity is consented, 1.6GW is in the planning system and 4.5GW is at an early stage of development for future submission into the planning system.
- Wind Power: Prime Minister Johnson has declared his goal of making the UK the “Saudi Arabia of offshore wind” and his government has set a goal of building 40 gigawatts (GW) by 2030, including 1GW of floating offshore wind. The government has committed to invest £160 million ($218 million) in wind turbine manufacturing facilities and modernization of related ports while calling for 60% local content in offshore wind projects.
- Energy Efficiency/Heating: the UK aims to establish a Future Home Standard to increase efficiency and deploy low carbon heating with a goal of 600,000 heat pump installations per year by 2028. £1 billion ($1.37 million) has been provided for the Green Homes Grant and initiatives to increase efficiency in schools, hospitals, and buildings are underway.
- Existing plants life extension & New Build: Existing nuclear plants include seven twin-unit advanced gas reactors (AGRs) and one pressurized water reactor (PWR), 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, but all of the AGRs will be retired by 2030. EDF Energy is building two Areva (France) EPRs at Hinkley Point, Somerset. Construction started in 2018 and EDF plans to have the first of these new reactors grid-connected by 2026. The project is valued at £25 billio ($34.4 billion). Hinkley Point is a joint venture of EDF (66.5%) with China General Nuclear Corporation (CGN) (33.5%).
- Small and Advances Modular Reactors: The UK Government has laid out its commitment to developing and deploying advanced nuclear technologies by providing approx. $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. Her Majesty’s Treasury has also committed roughly £215 million to support the licensing of Rolls Royce’s small modular reactor design. U.S. SMR and AMR technology providers have an opportunity to expand into the UK market.
- Decommissioning: The Nuclear Decomissioning Authority (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 with the NDA planning to spend around $4.5bn over the next couple of years.
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 technologies 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 (this six organizations are known as the “Big 6” and control 95% of the energy retail market);
- Transmission networks operators: National Grid, 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 UK Government has committed to an $18 billion nationwide smart meter roll-out, with energy suppliers responsible for the roll-out (both in terms of implementation and ownership as well as financing). The official national smart meter roll-out began in 2016 and was originally planned to finish in 2020. However, suppliers now have an extra four years to keep installing meters. The roll-out start date was pushed back multiple times and there have been delays with many parts of the roll-out since. Completing the national roll-out is an enormous logistical and technical challenge for the energy industry, involving visits to around 30 million homes and small businesses, and installing about 53 million new meters.
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 the government’s push towards a net zero carbon economy.
The government is investing more than $4 billion in low-carbon innovation, as the UK aims to end its contribution to climate change entirely by 2050. Additionally, legislation came into force last year allowing local planning authorities to determine projects with a capacity of over 50MW in England and 350MW in Wales. These were previously determined by central government, making the process longer and more complex.
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.
The past year saw an increased interest in battery storage co-located with wind and solar and we are now seeing more planning applications being submitted for these projects: siting storage with solar or wind that has an existing grid connection can save on planning restrictions and transmission network costs; the batteries can also directly reduce the chances of renewable power being curtailed at times when supply of electricity outstrips demand.
Major developers of UK energy storage projects include EDF, Pivot Power, Statera, and RES, with each company active in several power supply and flexibility markets, providing services to National Grid, Distribution Network Operators (DNOs), as well as operating in the wholesale energy markets.
World Nuclear Association Symposium
Low Carbon Networks & Innovation Conference
Bloomberg New Energy Finance Summit
- Nuclear Industry Association
- Energy Networks Association
- Government Departments
- Department for Business, Energy & Industrial Strategy
- Nuclear Decommissioning Authority
- Oil & Gas Authority
- Her Majesty’s Treasury
For further information, please contact:
U.S. Commercial Service
Tel: +44 (0)20 7891 3443