Five energy market developments to watch in 2025

By Anthony Ainsworth, Chief Operating Officer, npower Business Solutions.

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??? It’s been a busy six months since the UK General Election in July 2024. While the Labour Government has come under pressure in a number of areas, in terms of energy, there have been several major steps forward, including the publication of the Clean Power 2030 Action Plan, and the promise to establish Great British Energy (GB Energy).

Without doubt, things need to happen quickly if the UK has any chance of meeting its clean energy targets in just five years, and wider net zero ambitions by 2050. 2025 feels like a turning point, where we’ll see real change to our energy systems and infrastructure happen at pace.

Here are my top five energy market developments for businesses to watch this year:

1?? Ambition will need to (quickly) become action

The Clean Power 2030 Action Plan outlined an ambitious approach to combating some of the planning red tape and grid constraints that have hampered the development of renewable energy generation.

Indeed, our recent report, which canvassed the views of 350 UK independent generators - Clean power 2030: Harnessing the power of the UK's independent energy generators - revealed that planning restrictions were the number one barrier to the development of more assets, and cutting red tape around renewables was the top ask for government.

This plan now needs to be turned into tangible actions, so we look forward to working alongside government to make these happen.?

2?? Major electricity market reform begins

2025 will see the start of one of the biggest transformations to the electricity market to date - the Market-wide Half-Hourly Settlement (MHHS) reform.

For businesses, this will bring more granular cost allocation, and they will have access to new products, more innovation, new technologies and flexibility services from their energy suppliers, and ultimately a more cost-efficient energy system.

We have written and spoken in length about MHHS and the impact this will have on businesses - see our dedicated hub for the latest information and briefings.

3?? Great British Energy Act will be passed

At time of writing, the Great British Energy Bill is making its way through Parliament. When it receives Royal Assent and becomes the Great British Energy Act, it will help to establish GB Energy as a publicly-owned and operationally independent energy company and give the Secretary of State the ability to provide financial assistance to GB Energy.

As one of the key pillars in Labour’s mission to ‘Make Britain a clean energy superpower’, GB Energy will focus on developing more energy assets and encouraging more private sector investment. That said, there are concerns it could become a little bit of ‘everything to everybody’ so it needs to remain focussed.

4?? Greater focus on corporate sustainability reporting

Greater transparency and accountability when it comes to sustainability has become increasingly important. Many businesses - particularly larger corporations - are already undertaking thorough reporting under schemes such as the Energy Savings Opportunities Scheme (ESOS).

In 2025, it is expected that the UK will move towards more comprehensive and standardised reporting under the UK Sustainability Reporting Standards (UK SRS). These have been developed following the creation of two IFRS Standards by the International Sustainability Standards Board (ISSB), which is responsible for creating a global baseline for sustainability reporting.

It is expected the creation of the first two UK SRS will be put out for consultation in Q1 2025 and will form part of a wider Sustainability Disclosure Reporting framework led by HM Treasury.

5?? Increased innovation the energy sector

Many of the measures announced over the past few months are designed to drive innovation in the energy sector, whether that’s through developing new technologies, changing how we measure and monitor energy consumption and, for us as suppliers, how we innovate in terms of the products and services we offer our customers.

For example, MHHS means that energy data, and using sophisticated online visualisation platforms, will become even more important, to help businesses manage their consumption and make decisions about future energy and sustainability investments.

Newer technologies will also start to become more mainstream. For example, the International Energy Agency describes AI and energy as ‘the new power couple’, with the technology seen as a critical component of managing a more complex and dynamic energy system. We will wait to see how this develops over the coming year as changes to our infrastructure are accelerated.

2025 - a pivotal year?

So, in conclusion, 2025 will be a crucial year for the energy sector, with major change starting to happen. And, these changes will have an impact on businesses, with the ultimate aim of reducing energy invoices, lowering carbon emissions and increasing energy security.

There will undoubtedly be challenges along the way, particularly with the impact of wider economic and geopolitical factors. That said, we are looking forward to seeing where 2025 takes us.

?? Take a look at 2025 outlook for the price you pay for energy and your non-energy costs on your invoice.