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New Year: New Optimism for UK Energy Markets

Let’s face it, 2019 was a pretty tough year for the UK energy market. Most operational businesses saw declining profits and for several, ultimate failure or fire sale. Prospective businesses failed to get off the ground due to perceived market risk and many of those looking to invest in infrastructure struggled to find bankable opportunities with acceptable levels of risk. The fallout was that too many in the sector faced the trauma of losing their job, with essential skills and talent migrating to other industries. All this happened in an environment of policy paralysis as Brexit chaos and political infighting sucked up all available parliamentary time.


So what’s changed that gives reason to be optimistic?


The first thing is that the UK has coalesced around one central theme- that of delivering zero carbon targets. Whilst committing to zero carbon by 2050 was Teresa May’s parting gift in the summer, the recent election demonstrated how important it is now seen as a cross party political lever. Whether delivered by 2030, 2040 or 2050, the commitment featured in all manifestos. Local Authorities, businesses and universities are proactively declaring climate emergencies and developing targets for carbon reduction- budgets are being put aside to deliver necessary change. The drive for carbon reduction has huge voter and consumer buy in, which will be difficult for any political party to ignore going forward and gives confidence that it is here to stay.


The second reason to be optimistic, is a sense of increasing stability and direction in government, and specifically in relation to Brexit. Investment, business and risk appraisal is strongly influenced by market certainty- and whatever peoples’ views on the election/Brexit outcome, there is now a clear mandate for a single direction for at least a few years. This in itself will change sentiment to make stuff happen.


The third reason, is that having won a strong mandate, the Conservatives now need to get on with delivery. Whether, stimulating investment and growth, addressing the north/south divide or delivering net zero- much of the answer can be enabled by the energy markets. We’re ready to go, and have the advantage of 'small and localised' being the go to model rather than reliance on behemouth infrastructure projects in other sectors that will take years to get off the ground- we just need some clear policy signals in order to fire the starting pistol.

So whilst conditions remain tough now, it feels like there are enough drivers for market conditions to improve. Let’s hope that BEIS and OFGEM increasingly focus on the imperative for zero carbon- and as I’ve said before, the need for speed of change. Most of the market accepts that they’ve had their hands tied with the Brexit shenanigans but will expect early and clear direction and leadership now. Let’s start with publication of the much delayed white paper.


It feels like 2020 is the start of a new chapter and we can’t hang around if 2050 targets are to be realistically achieved- so let’s get on with it. Happy New Year!


EnergyBridge helps investors, businesses and local authorities navigate complexity, unlock value and reduce carbon in the UK energy market with a combination of deep market and operational expertise and experience. Contact: jo.butlin@energybridge.co.uk; 07464 949975