Electric Insights – A record year for Britain’s renewable energy revolution

AI and electric cars push up Britain’s electricity demand

Britain’s electricity demand has reached a turning point, seeing two consecutive years of growth for the first time in over 20 years.

Since its peak in 2005, demand has fallen by more than a fifth – often seen as a sign of wider decline, deindustrialisation and outsourcing. Now, with Artificial Intelligence poised to reshape the economy, the data centres that power AI models have contributed to raising Britain’s electricity demand by 1.7% in 2025. AI presents a major growth opportunity, expected to boost UK GDP by £550 billion over the coming decade.

Britain’s electricity demand is also being driven upwards by electrifying transport and heat. Electric vehicle sales grew by 27% to reach 475,000 pure-battery vehicles plus 225,000 plug-in hybrids, meaning one in three cars sold in 2025 was electric.

A record year for renewable energy production

Electrification is central to decarbonising Britain’s homes and cars. But this raises the bar for the power system, which must produce more electricity while making it cleaner. In 2025, renewables did exactly that. Output from wind, solar and biomass all reached record highs, growing faster than demand. For the first time, clean sources supplied more than three-fifths of Britain’s electricity, up from just one-fifth in 2010.

The focus is shifting from building clean power to orchestrating a clean system. Curtailment, congestion, and balancing are becoming as important as generation records. System flexibility will determine whether more clean output translates into lower bills and lower emissions. If grid upgrades lag, curtailment will continue.

Britain’s spark gap is holding back the electric revolution

Britain’s energy prices are fighting against its net zero ambitions. Replacing oil and gas with electricity is the biggest opportunity to reduce emissions and improve energy security. But instead, the people switching to electric vehicles and heat pumps are increasingly being punished with higher bills. Ofgem’s latest price cap pushed household electricity prices up by 5%, while cutting gas bills by 6%. This has made switching to clean electricity a bad deal for British households.

The ratio between electricity and gas prices, known as the spark gap, is now higher in Britain than in any other large country. This means a modern heat pump, which converts 1 unit of electricity into 4 units of heat, would be more expensive to run than a standard gas boiler, despite producing 85% less CO2. The same heat pump in France or the US would cost half as much as gas to run – which helps to explain why the UK lags behind in heat pump uptake.

Oil and gas in an over-supplied world

Oil is the world’s largest source of energy, and never far from the news. December and January saw global geopolitics flare up, with major disruptions in Venezuela and Iran. These short-term shocks mask the wider story of ‘demand displacement’. Renewables are displacing gas and coal burnt for electricity, and electric vehicles reduce the oil needed for transportation. Looming oversupply of fossil fuels suggests that lower prices could be a prospect for this coming year.

Download the full Q4 Electric Insights report below.

Disclaimer

We’ve used all reasonable efforts to ensure that the content in this article is accurate, current, and complete at the date of publication. However, we make no express or implied representations or warranties regarding its accuracy, currency or completeness. We cannot accept any responsibility (to the extent permitted by law) for any loss arising directly or indirectly from the use of any content in this article, or any action taken in relying upon it.