Electric Insights – Insulating Britain from geopolitical energy shocks

Insulating Britain from geopolitical energy shocks

Just as Britain was emerging from the energy price crisis following Russia’s invasion of Ukraine, conflict in Iran gives a fresh reminder that our bills are firmly dictated by global fossil fuel markets. The war in the Middle East closed the Strait of Hormuz, which had carried 20% of global oil and seaborne gas. Natural gas prices doubled in Britain, and the Government is now changing how it supports older renewable generators to try to weaken the link between gas and electricity prices.

Despite the crisis, Britain is not at imminent risk of energy shortages. NESO confirms that electricity supplies are secure, with sufficient operating surplus due to clean generation sources.

Britain’s AI ambition is constrained by the grid

Britain’s uptake of AI is growing fast, but so are the obstacles to delivering it. OpenAI’s Stargate UK was set to be the centrepiece of the North East’s AI Growth Zone, but is now paused, partly due to energy costs. Nearly £10 billion of data centres were approved in 2025, but less than £1 billion were actually built.

Data centres are becoming a contentious pressure in Britain’s grid connection queue. NESO reports that 140 data centre proposals seek ~50 GW of grid connections – equal to Britain’s entire peak demand. Reforms to Britain’s connection queue should help data centres, which are now treated as strategic demand. However, the sheer scale of queues and delays means growing uncertainty over how many projects will actually be built.

Data centres are seen as a problem, but when designed well, they could be part of the solution. Rather than building even more power stations to meet demand, the grid needs large users that can help when the system is under stress.

Getting better connected with Europe

Britain left Europe’s shared electricity market back in 2021, yet since Brexit, its power system has become more interconnected than ever. The Government is now considering a closer relationship with Europe, which should allow our cross-border cables to be used more effectively. With rising demand and variable renewables pressuring the grid, better electricity trading could help to lower bills and strengthen security.

Cables to Europe have moved from the margins to the centre of our power system. Britain now has 10 interconnectors with a total capacity of 10.3 GW, linking into neighbouring systems. The EU asked all member states to build cross-border interconnector capacity equal to at least 10% of their total generating fleet by 2020, rising to 15% by 2030. Despite not being bound by EU rules, Britain reached the 10% target and has now overtaken even the well-connected German power system. Building links to other countries is only part of the challenge. Britain also needs more grid capacity to move power within its own borders.

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