Renewable Energy in the United Kingdom

Topic: Industry
Words: 1604 Pages: 8


The net generation of power from renewable sources constitutes the renewable energy market. It is organized into four sections: hydroelectricity, wind energy, solar energy, biomass, and geothermal. The UK renewable energy industry had total sales of $14.9 billion in 2020, showing a 15.5 percent compound annual (Department of Business, 2022). growth rate (CAGR) between 2016 and 2020. Between 2016 and 2020, market production volume expanded at a CAGR of 12.4 percent, reaching 129,954.9 GWh (Vourvoulias, n.d.; (Prime Minister’s Office, 2020).

Wind energy leads the country’s renewable energy sector since it is the most cost-effective means of generating electricity. As of 2020, the United Kingdom is also one of the top countries in the offshore wind sector.


The UK government does not have perfect control since its policies are influenced to some extent by global and European politics. The government’s renewable energy strategy is part of a larger attempt to guarantee that the UK reaches its legally bound aim of reaching net zero emissions by 2050 and rebuilding greener from coronavirus (Prime Minister’s Office, 2020). Over the last decade, the United Kingdom has reduced carbon emissions more than any other wealthy country. The UK’s low carbon and renewable energy economy (LCREE) was expected to be worth £41.2 billion in 2020, with no substantial growth since the poll began in 2014 (Thomas, 2022; Solorio & Fairbrass, 2017). With no major change from 2014, employment in the UK LCREE was predicted to reach 207,800 full-time equivalent (FTE) in 2020. Businesses with 250 or more workers showed a 6% drop in turnover and a 3% decline in employment in LCREE-related activities between 2019 and 2020, however, this was still 16% and 26% greater than in 2015 (Shah et al., 2018; Thomas, 2022). In terms of social factors, there is an overall trend of eco-friendliness and increased support for the green economy (Kumar, 2020; Infield & Freris, 2020). As such, there are plausible social factors.

The United Kingdom leads the world in offshore wind, with over 700 turbines already placed, and is increasing onshore wind deployment, with the largest projects in Europe now operational or under development in Scotland and Wales (Díaz & Soares, 2020). In 2019, UK emissions were 42% lower than in 1990 and the GDP increased 72% within the same period. The PESTEL analysis showed that the wind energy segment of the industry is growing faster than other energy segments (Mirzania et al., 2019; Kava et al., 2021). Moreover, there are already more turbines and national plans related to wind energy. As such, it is more likely that the industry will experience the dominance of this segment in the near future. The second trend, which is highly likely to occur is an increased support of the UK government as the general population wants to have a greener economy and the industry is already large among other economic sectors.


The first scenario of increased government financial and political support for the green economy will result in an expansion of the renewable energy industry. This is because the industry is more likely to have increased subsidies to implement more projects. Moreover, the support can make the industry dominant in the economy of the UK as the focus of the government would be on green energy (Lu et al., 2020). This also can reduce oil and coal exports, thereby strengthening the country’s energy profile. As for the opposite scenario, the industry will be underdeveloped if the government decreases its support. There will be no finances, in particular subsidies to expand the market. The third scenario, where there is a dominance of the wind energy segment provides a plausible future for the industry as the projects of this segment are easy to implement as opposed to other segments (Raugei et al.,2018). The dominance will allow the UK to have its image associated with wind energy and a greener economy. In the opposite case, the development of each segment of the renewable energy industry would proceed almost identically and there will be no overall focus in the industry.

The Most Plausible Scenario

With the worldwide trend of green energy, the government of the UK is more likely to support the renewable energy industry. Such a trend is seen in the recent UK actions on renewable energy. For example, the UK government has announced plans to invest in innovative renewable energy storage technology. As part of this strategy, the government has given £6.7 million ($9 million) to 24 projects around the country through the Longer Duration Energy Storage (LODES) competition, totaling £68 million ($91 million) (Department for Business, 2022a; Prime Minister’s Office, 2020). The funds will be used to stimulate the development of innovative energy storage technologies and aid the UK’s transition to renewable energy sources, as well as to encourage private investment and the creation of green employment. Renewable energy now employs more than a quarter of a million people, and by 2020, it might employ more than 500,000 (Boait et al., 2019; Elliott, 2019). Job creation in the renewable energy industry, investment in new manufacturing capabilities, and the resulting direct and indirect benefits will help us move to a green economy. More renewable energy in the UK can provide us with considerably more security and energy independence, helping to protect us from global fossil fuel price fluctuations.

Impact on Industry

By adopting governmental support, the environment would be greener, having a positive impact on carbon emissions. For instance, there is the UK government initiative, the Renewable Transport Fuels Obligation and over £400 million in support to encourage the uptake of ultra-low carbon cars will help to minimize the carbon effect of transportation (Department for Business, 2022). The UK government will also release a Bioenergy Strategy by the end of this year to provide a clear signal on the most cost-effective and sustainable role for bioenergy in heat, transportation, and power, which may provide almost half of the entire 2020 objective. With governmental support, there will be more timely investments that will guarantee that renewable energy plays a long-term role as part of a low-carbon power mix. Renewable energy, along with energy efficiency, nuclear, and carbon capture and storage, will help decrease UK emissions in accordance with our carbon budgets and keep us on pace to meet our 2050 objective of an 80% reduction in emissions (Department for Business, 2022). In addition, the market share of the renewable energy industry would increase due to finances from the government along with the growing support of the public.

5 Forces Analysis

First, if competition among current participants in a sector is fierce, it will push down prices and reduce the business’s total profitability. the renewable energy industry in the UK is highly competitive. This rivalry has an impact on organizations’ overall long-term profitability, yet the market is growing, and the competition is inevitable. Second, new entrants in the sector provide innovation, and new ways of doing things, and put competition under pressure by lowering pricing strategies, cutting expenses, and delivering new value propositions to clients. To maintain their competitive advantage, competing firms must handle all of these issues and construct effective barriers. Third, almost all of the enterprises in the industry get their raw materials from a variety of vendors. Powerful suppliers in the Basic Materials industry utilize their bargaining leverage to exact higher costs from green energy companies. Higher supplier negotiating power has a negative influence on the industry’s overall profitability. Fourth, customers may be a demanding bunch. They want to acquire the greatest products offered at the lowest feasible price. In the long run, this reduced the profitability of the renewable energy companies. The smaller and more stronger the client base of those companies, the greater the customers’ bargaining strength and capacity to demand growing discounts and offers. Fifth, industry profitability decreases when a new product or service solves comparable client wants in different ways. The danger of a replacement product or service is strong if it delivers a value proposition that is distinct from the industry’s current offerings. However, it will not threaten the green energy industry as it is a new market that is growing in the modern world.


Renewable technologies generate power by harnessing natural resources. Wind, wave, marine, hydro, biomass, and solar energy are all sources of energy. It is also produced utilizing renewable natural energy sources such as biomass. Renewables now provide more than 20% of the UK’s power, with EU objectives indicating that this figure will likely rise to 30% by 2020 (Tiwary et al., 2019; Shao et al., 2022). Renewable energy will continue to be an essential element of the carbon-reduction plan after 2020. A variety of technologies, such as onshore and offshore wind farms, biomass power plants, and hydropower systems, will be required to achieve this. With some of the greatest conditions in Europe and high average wind speeds, the United Kingdom is ideally positioned to benefit from wind power (Renewable Generation, n.d.; Şahin, 2021). Onshore and offshore wind farms are key sources of electricity in the United Kingdom. The United Kingdom has invested heavily in offshore wind, installing more capacity than the rest of the world combined. The UK government has pledged to cut greenhouse gas emissions by 80% by 2050. To do this, portions of the UK energy system must produce negative emissions — that is, they must remove more carbon from the atmosphere than they release.

Electricity Market Reform is now developing a new plan to assist renewables and other low-carbon technology. The program will be known as a Feed Tariff with a Contract for Difference (CfD) (Renewable Generation, n.d.).


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