The grid is getting closer to 100% clean power. What happens next?

This change hasn’t happened overnight. Low-carbon hours have progressively increased over the past decade. On July 16 2016, fossil fuels made up 47.2% of the electricity generation mix. The figure had almost halved by the same day in 2024 – just a quarter (25.2%) of energy generation came from fossil fuels.

This changing energy mix presents both challenges and opportunities, whether on a national level or for individual businesses. Either way, navigating this change comes down to flexibility in both strategy and infrastructure.

The Government’s Clean Power 2030 Action Plan targets at least 95% generation from clean sources, but delivering that ambition will require the grid to be capable of operating entirely on clean power at certain times.

Navigating a changing landscape

As more renewable generation comes onto the grid, the economics of electricity start to change. Wind and solar have no fuel costs, so they are relatively inexpensive to run. When renewable generation is high, less gas-fired generation is needed, which can put downward pressure on wholesale electricity prices.

Over time, that should also make wholesale electricity prices less exposed to volatile gas prices. But lower wholesale prices do not necessarily mean equally large reductions in customer bills. Network costs, policy costs and other charges also make up a significant proportion of the overall cost of electricity.

When renewable generation falls, the grid still needs to balance supply and demand. Gas-fired generation currently plays an important role in providing that flexibility, particularly at times of peak demand. The challenge is to scale other sources of flexibility so the system can become less reliant on gas over time.

There are several ways to do this. Battery energy storage systems can store excess electricity when generation is high and release it when demand rises. Pumped storage works on a similar principle, using surplus power to move water to a higher reservoir before releasing it through turbines when electricity is needed.

Interconnectors also allow electricity to be imported or exported between Great Britain and neighbouring markets, helping balance supply and demand across a wider system. Demand-side flexibility will also become increasingly important. As the energy system changes, businesses that can adapt when and how they use electricity will have a growing role to play in helping balance the grid.

Opportunities in a low-carbon world

For most organisations, energy is essential – so changes in the market will affect them whether they actively respond or not. But there are also opportunities for organisations that can become more flexible in how and when they use electricity. That could mean using flexible tariffs and demand-side response, investing in on-site generation or storage, or using Corporate Power Purchase Agreements (CPPAs) to help manage exposure to market volatility.

That could become increasingly important for carbon reporting too. Proposed changes to the GHG Protocol’s Scope 2 guidance would introduce hourly matching for many organisations using contractual instruments. Hourly matching assesses when electricity is generated and consumed and aims to align renewable electricity procurement more closely with when power is actually consumed.

Consumers are already familiar with this principle through time-of-use tariffs, particularly for electric vehicles. As similar approaches become more common in the business market, businesses will have more reason to think about when they use energy, not just how much they use.

For businesses with their own on-site generation, the opportunity can be greater still. Renewable power can be used on site or stored for later. It can also be combined with demand management and load shifting to provide flexibility to the grid and potentially create new revenue opportunities.

Even without on-site generation, many businesses may have more flexibility than they realise. Significant loads such as EV charging, space heating, cooling and cold storage, water heating, and manufacturing or process loads can all be adjusted where operations allow.

A combination of demand-side response and asset optimisation can deliver meaningful savings. For longstanding Drax client Sundown Products, analysing half-hourly energy data and identifying where operations could flex helped unlock an initial guaranteed saving of £35,000.

The best way forward

For businesses, greater flexibility starts with understanding what they already have. Existing assets, operational data and energy use can reveal where demand can shift, costs can be better managed and new value can be created.

The right approach will be different for every organisation. It could combine market intelligence, flexible tariffs, asset optimisation, on-site generation or storage. What matters is bringing those elements together around operational and commercial needs.

Working with the right partner can help businesses identify where flexibility creates the greatest value and put the right strategy, technology and energy solutions in place.

Want to make a start? Get in touch.

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