Renewable energy in the UK: industry profile

As the UK continues its push towards Net Zero, the renewable energy industry remains buoyant and highly significant, having grown markedly in recent years.

Data assembled by the Association for Renewable Energy and Clean Technology (REA) indicate that the market value of the industry as a whole reached £24.38 billion in 2022/23 – up 6% on the year before. Employment in the sector also rose by 1.6%, reaching 142,981 FTEs.

According to IBISWorld, the revenue of the renewable electricity generation sub-sector has grown at a CAGR of 8.7% over the past five years, to reach an estimated £14.5 billion in 2025. In 2024 the UK generated a record 50.8% of its electricity from renewable sources — up from 46.4% in 2023, and a stark transformation from just 6.9% in 2010. While natural gas remains the single largest individual electricity generation source at around 28%, BP predict that its use will decrease significantly in the coming decades.

The renewable heat sub-sector has also grown in recent years — albeit more modestly. Government figures show that renewable heat increased by 2.9% in 2023, and heat pump sales more than tripled between 2019 and 2024, bolstered by government incentives. That said, International Energy Agency (IEA) data indicate that heat production in the UK remains dominated by fossil fuels, particularly natural gas.

Renewable transport fuels, too, have lately seen a modest uptick in their use. In 2023 renewable fuels made up 7.5% of UK transport fuels by volume, up from 6.8% the year before. Whilst long-term demand for biodiesel and bioethanol is likely to decline with the rise of electric vehicles, aviation and freight may present future growth opportunities in this area.

Across all uses, renewables met 15.5% of UK energy demand in 2023, up 1.3% year-on-year. With total market value projected to reach £41.14 billion by 2035, the outlook for the industry is broadly positive, and opportunities abound — particularly in the electricity generation sub-sector. However, there are challenges to be navigated; these are explored in more detail below.

Three primary segments together make up the bulk of the UK renewable energy industry: renewable electricity generation, renewable heat, and renewable transport fuels. Of these, renewable electricity generation is by far the most mature and economically significant.

Detailed statistics on the use of particular renewable energy sources in the UK can be found in the Statistical Review of World Energy, produced by the Energy Institute.

Wind power remains the backbone of the renewable electricity generation sub-sector, accounting for 29.5% of national electricity supply in 2024. Offshore wind generated 17.2%, and onshore wind 12.3%. Offshore wind projects are further divided into fixed-bottom and floating wind, the latter being an emerging technology with high growth potential, according to the government's Clean Energy Industries Sector Plan.

Bioenergy — including solid biomass, biogases and bio-liquids — accounts for a further 13–14% of electricity generation. Its expansion over the past decade has largely stemmed from the conversion of coal-fired plants to biomass-fuelled operation. Though sometimes controversial on account of its carbon emissions, bioenergy remains the UK’s second-largest renewable electricity source.

Smaller contributions are made by solar and hydropower. Solar photovoltaic (PV) installations contributed 5.2% of electricity generation in 2024, up from virtually zero a decade earlier. Solar capacity growth has slowed in recent years but remains positive. Hydropower, meanwhile, supplies around 2% of the mix.

Renewable heat is a smaller and less developed segment. Despite policy support, the transition away from gas-fired heating remains sluggish — as reported by DNV. Government figures show that in 2023, renewable heat demand was mostly met by solid biomass (62%) and heat pumps (26%), with small contributions from waste, biogases, and active solar systems.

The renewable transport fuels segment is also relatively small, though it shows signs of future potential, particularly in aviation and heavy transport. In 2023, biodiesel and bioethanol together accounted for nearly 80% of verified renewable fuel, with small but growing roles for biomethane and sustainable aviation fuel. There is now widespread use of B7 (containing up to 7% biodiesel by volume) as diesel fuel and E10 (containing up to 10% bioethanol by volume) as petrol.

After a period marked by policy volatility — exemplified by the closure of the Renewable Obligation scheme to new entrants in 2016, and a de facto moratorium on onshore wind — the UK government has recently reaffirmed its commitment to renewable energy through a suite of ambitious reforms and investment pledges.

Following the July 2024 general election, key regulatory barriers were dismantled, including the long-standing restrictions on onshore wind development in England. In addition, major solar projects have been approved.

A central plank of the new agenda is the Clean Power 2030 Action Plan, the aim of which is to transition to an electricity system which generates enough clean power to meet Britain's total annual electricity demand by 2030.

The Clean Energy Industries Sector Plan, published in June 2025, outlines a broader industrial strategy to position the UK as a global clean energy leader by 2035. It aims to double clean energy investment to over £30 billion annually, with significant catalytic public investment being provided through institutions such as Great British Energy, the National Wealth Fund, and the British Business Bank.

In addition, the government has doubled down on efforts to encourage the use of heat pumps and renewable fuels. Programmes like the Boiler Upgrade Scheme and Renewable Transport Fuel Obligation remain in place to support market uptake and industry growth.

Collectively, these measures mark a significant shift in policy momentum, and present oppportunities for businesses operating in the industry. Onshore wind and solar projects, in particular, ought to benefit.

The rapid expansion of the renewable energy industry has outpaced the development of the national grid, creating serious structural bottlenecks.

At present, grid constraints mean that the full potential of renewables cannot be fulfilled. Transmission infrastructure often struggles to cope with the variability of renewables and the distance between generation — often located in remote areas — and demand, concentrated in the south of England. As a result, constraint payments to curtail renewable generation are projected to exceed £1.8 billion in 2025.

Recognising these issues, the government and key industry bodies have launched ambitious initiatives which aim to expand and modernise the grid, the former making grid reform a cornerstone of its Clean Energy Industries Sector Plan. Ofgem’s new Advanced Procurement Mechanism and the £67 billion Great Grid Upgrade are key examples.

However, the scale of the task is immense. As a recent BDO report notes, delivering the necessary upgrades will require building five times more infrastructure in six years than was constructed over the previous three decades, and delays could stem from public opposition to new pylons and a shortage of skilled commissioning engineers.

In the meantime, RSM predict that developers may look to get around grid issues by exploring alternative options, such as smart micro-grids.

The UK’s renewable energy sector has long grappled with a sluggish and often obstructive planning system.

A recent BDO report notes that since 2012, the average approval time for national infrastructure projects has increased from two-and-a-half to four years. Between 2020 and 2023 alone, the average time to grant planning permission rose by 30%, according to CBRE.

Cornwall Insight report that nearly two-thirds of renewables projects proposed between 2018 and 2023 failed to pass the planning stage — 63% were abandoned, refused, withdrawn, or ultimately expired.

This has had a material impact. SSE, for instance, cut its five-year renwables investment plans by £3 billion in 2025, citing planning and policy uncertainty.

However, reforms are now underway. The Planning and Infrastructure Bill, introduced in March 2025, aims to streamline Nationally Significant Infrastructure Project (NSIP) approvals by reducing consultation burdens and limiting opportunities for judicial review. Electricity grid connection rules are also to be overhauled: the current “first come, first served” system will be replaced with a “first ready, first connected” model, prioritising viable, strategic projects.

If successfully implemented, these measures could unclog a critical bottleneck — offering developers renewed confidence in the UK’s clean energy pipeline, and improving the industry's growth prospects.

The UK renewable energy industry faces a range of intersecting challenges related to workforce capacity, supply chain resilience, and input cost inflation.

As noted by BDO, many parts of the sector remain heavily reliant on imported components, skilled labour, and raw materials. This has left projects vulnerable to geopolitical shocks and global supply disruptions — particularly in wind turbine manufacturing and specialist offshore equipment. The government’s Clean Energy Industries Sector Plan recognises this issue, and outlines plans to localise production and scale up foundational domestic industries through new investment vehicles such as Great British Energy and the National Wealth Fund.

Workforce shortages are another pressing concern. Offshore wind and renewable heating are particularly affected, with the latter requiring tens of thousands of new heat pump installers to meet deployment targets. While training schemes have expanded — over 9,000 individuals qualified in heat pump installation in 2024 — uptake into active employment remains inconsistent. The government has extended support through the Heat Training Grant and pledged over £100 million to address engineering skills shortages more broadly.

Cost increases, meanwhile, are putting some sub-sectors under acute pressure. Volatile global markets have driven up prices for wood pellets, for example, leading to the temporary uneconomical operation of some biomass plants. The Contracts for Difference (CfD) scheme does provide electricity generators with some protection from inflation by indexing the strike price to the Consumer Price Index, however.

On the consumer side, high upfront costs for technologies like heat pumps and the need for broader retrofits (such as insulation or radiator upgrades) continue to inhibit demand.

Designated a ‘frontier industry’ in the UK government’s Clean Energy Industries Sector Plan, hydrogen is increasingly seen as a critical enabler of decarbonisation across power, heat, transport, and industry.

‘Green’ hydrogen — produced via electrolysis using renewable electricity — offers a flexible, low-carbon alternative to fossil fuels, with potential applications ranging from heavy transport and industrial feedstocks to grid balancing and long-duration energy storage.

At present, green hydrogen production in the UK is in its early stages of development, but efforts are being made to stimulate growth in this area. In July 2025 the government confirmed that 10 commercial-scale green hydrogen projects from the first phase of its flagship hydrogen programme – Hydrogen Allocation Round (HAR1) – can begin construction. A further round (HAR2) is expected soon.

So far, however, progress has been slow. As BDO note, green hydrogen production remains expensive, with high upfront costs and limited infrastructure. This is hindering early adoption — DNV forecast that the UK may fall well short of its 2030 goals in this area without further intervention.

Nonetheless, green hydrogen's long-term promise remains substantial — if dependent on policy clarity, market incentives, infrastructure investment, and supply-demand coordination.

The diversity of the UK renewable energy industry means that any list of notable players will not be fully representative or comprehensive.

That said, some examples of noteworthy players are set out below.

• Anesco — leading energy services company specialising in renewable energy generation, energy storage, and energy efficiency.
• Drax — large, well-known company engaged in renewable electricity generation.
• Ecotricity — pioneering green energy company (founded 1995) with an extensive wind power portfolio.
• Greenergy — major British fuel company that is Europe’s largest producer of biodiesel from waste oils.
• ITM Power — Sheffield-based cleantech company that designs and manufactures PEM electrolysers for green hydrogen production.
• Kensa — the UK’s leading manufacturer and installer of ground-source heat pumps.
• Lightsource BP — a global leader in solar energy; develops, finances, and operates solar projects.
• Melton Renewable Energy — developer of renewable energy solutions, with an emphasis on biomass power generation and waste-to-energy technologies.
• Octopus Energy — fast-growing energy group; supplies 100% renewable electricity and operates a portfolio of renewable generation assets.
• RES Group — the world's largest independent renewable energy company, involved in projects worldwide.
• SSE — leading energy company in the UK, with a strong focus on renewable electricity generation.
• Vivergo Fuels — the UK’s largest bioethanol producer.

ICAEW’s Library & Information Service can provide information on UK and Irish participants in the renewable energy industry via its wide range of company information services. This includes:

• Information on company acquisitions in the sector
• Private company transaction multiples
• Company data
• Beta values for companies and the sector
• P/E ratios for companies and the sector

For more information, please contact our enquiry team on +44 (0)20 7920 8620 or at library@icaew.com to discuss your requirements.

• Anaerobic Digestion and Bioresources Association
• British Hydropower Association (BHA)
• Centre for Alternative Technology (CAT)
• Chartered Institution of Water and Environmental Management (CIWEM)
• Energy Institute
• Energy UK
• Heat Pump Association
• Office of Gas and Electricity Markets (OFGEM)
• Renewable Energy Association (REA)
• Renewable Transport Fuel Association
• RenewableUK (formerly the BWEA)
• Scottish Energy Forum
• Solar Energy UK