Large Energy Users Explore Alternatives to the Grid

Hello, Champions of Net Zero!
In the ever-evolving landscape of energy management, the UK stands at a crucial crossroads. With persistent high energy prices and frustrations around sluggish grid connections, many large organisations are taking matters into their own hands. The focus is shifting towards energy independence, with a growing trend in on-site generation, energy storage, and micro-grids. This shift not only aims to alleviate the immediate challenges posed by volatile energy prices but also aligns with the UK’s broader goals of economic growth and decarbonisation.
The UK government has identified economic growth and the decarbonisation of our energy systems as two primary objectives. The interconnection between these goals is undeniable. High energy prices can erode business confidence, contribute to inflation, and deter crucial investments needed for infrastructure and job creation. Particularly for energy-intensive sectors—those most affected by decarbonisation policies and energy regulations—the stakes are high. These sectors are not only vital for economic growth but also play a crucial role in the UK’s journey towards a net-zero future.
Recognising these challenges, we sought to understand the perspectives of large energy users—those with annual energy expenses exceeding £100,000. To do this, we commissioned a comprehensive survey to gauge their thoughts on the measures necessary to stimulate growth in this new energy landscape.
One of the most pressing concerns raised by the respondents was the urgent need for faster grid connections. Over half of the participants (58%) highlighted this issue, indicating a strong desire for essential sectors to be fast-tracked in connection timelines. For many energy-intensive processes, such as manufacturing, timely connections to the transmission grid are critical. Unfortunately, companies can face waits of several years, which stifles growth, employment opportunities, and decarbonisation efforts alike.
From an investment perspective, this delay poses a significant disadvantage, especially when coupled with the relatively high electricity prices in the UK. Consider this: if you were a foreign investor contemplating where to establish a factory or data centre, would you choose a country where grid connections may take up to seven years and where electricity costs are among the highest in the developed world? This conundrum is not lost on the UK government. The Chancellor echoed this sentiment on budget day, asserting that accelerating grid connections and enhancing network infrastructure is pivotal to unlocking private investment and fostering growth in clean energy sectors, as well as in burgeoning industries like artificial intelligence, data centres, and manufacturing.
The importance of reforming grid connections is also emphasised in the Clean Power 2030 Action Plan, which aims to accelerate connections for key industries. While the government anticipates that these reforms will lead to swifter connections for many demand customers, the true impact of the National Energy System Operator’s reform process remains to be seen. Nevertheless, the need for these reforms is clear and urgent.
Our survey results reveal another significant trend: a growing commitment among large energy users to enhance their energy independence. An impressive 63% of respondents indicated they are exploring investments in on-site generation and storage solutions, seeking to minimise reliance on the grid and bolster self-sufficiency. In addition, companies are actively pursuing energy efficiency measures, with 82% implementing strategies to improve building efficiency and 39% integrating digital energy management solutions.
Despite the myriad of challenges, there is a prevailing sense of optimism among these organisations. A remarkable 86% of survey participants agreed or strongly agreed that the energy transition would benefit their sector, and 82% felt it would positively impact their individual businesses. However, to fully realise these benefits, more robust government action is essential in specific sectors.
Support for the deployment of low-carbon fuels, such as hydrogen and sustainable aviation fuel, was another key area of concern, with 64% of respondents advocating for increased government backing. This highlights the recognition that while the private sector is eager to innovate and invest, it cannot single-handedly build the necessary infrastructure for a successful transition.
In light of this, it is encouraging to note that the Chancellor has recently pledged additional funding for the development of low-carbon fuels in aviation. Furthermore, an allocation of £350 million has been earmarked to assist energy-intensive industries in implementing energy efficiency measures, decarbonisation initiatives, and technological advancements.
Additionally, the government has announced a forthcoming industrial strategy that is intended to support large businesses. However, clarity is still needed regarding how energy considerations will be integrated into this strategy. Energy should undoubtedly be a fundamental component of any industrial approach in today’s context.
Many of these organisations are embarking on a complex and lengthy journey towards achieving net-zero emissions, venturing into a domain—energy—that is often outside their core expertise. To navigate this challenging terrain, they require the empowerment to make bold investment decisions, supported by the right expert guidance, investment funding, regulatory frameworks, and policy backdrops.
To harness the positive sentiment expressed by businesses towards the energy transition, the government must help them overcome the numerous hurdles posed by the current market conditions and policy designs. By doing so, it may unlock the green growth that many stakeholders are eagerly anticipating.
The challenges are substantial, but the potential rewards are even greater. As the UK strives towards a sustainable future, the partnership between government and large energy users will be key to realising a decarbonised economy that benefits all. Together, we can navigate the complexities of this transition, paving the way for a brighter, greener tomorrow.
For more insights and updates on energy transformation, visit Mott MacDonald.
This article first appeared in the January/February 2025 issue of Energy Manager magazine. If you’re keen to stay informed on energy efficiency and management, consider subscribing for more in-depth articles and analyses.