Clean power, geopolitics and the UK's path to energy security
Learn moreInstitutional Investments
Clean power, geopolitics and the UK's path to energy security
19/3/26
10 min
Renewable energy
Insight
The past several years have underscored a stark reality: geopolitical instability translates directly into energy price volatility. Escalating conflict in the Middle East, renewed tensions between major powers and disruptions to global fuel supply chains have all pushed up fossil fuel prices, exposing the UK’s continued vulnerability to external price shocks. Recent market movements linked to risks around the Strait of Hormuz and Qatar’s temporary halt in LNG production, as Qatar represents roughly 20% of global LNG supply, illustrate the sensitivity of global gas markets to geopolitical events.
The UK experienced one of the clearest examples of this exposure during the post Covid recovery and the upheaval following Russia’s invasion of Ukraine. Wholesale gas prices, which averaged around 40–60p per Therm in mid 2021, surged to 454p per Therm by early March 2022. Although the UK imported only around 5% of its gas directly from Russia, prior to the invasion, approximately 40% of Europe’s gas supply was dependent on Russian pipeline imports. The UK was not immune to the price shocks because both the UK and EU reference prices are set at the Dutch TTF hub. The sharp decline of these flows drove TTF prices sharply higher, with UK prices following suit. The resulting shock sent 30 UK suppliers into administration and forced the government to spend over £35 billion in support for households.
The UK’s declining domestic fossil fuel production compounds this vulnerability. The North Sea is now a mature basin and in long-term decline. Oil output in 2024 was 76% below 2000 levels and is projected to fall to just 2% of 2000 levels by 2050 or 4% with new licences. As OFGEM and the National Energy System Operator (NESO) recently highlighted to Parliament’s Energy Security and Net Zero Select Committee, North Sea production is simply too small a share of global output to cover domestic demand or even influence domestic energy prices. Increasing licensing cannot deliver energy independence, nor can it protect the UK from international price volatility.
Clean power as the UK’s strongest defence against volatility
It is within this context that the case for accelerating the clean energy transition becomes, overwhelmingly, an issue of economic security. During the Committee’s recent session on the Cost of Energy, both OFGEM Chief Executive Jonathan Brearley and NESO Chief Executive Fintan Slye made clear that meeting the government’s Clean Power 2030 target is the UK’s strongest defence against future price shocks of the type triggered by the Iran conflict or the 2022 Russian invasion of Ukraine. NESO further confirmed that following its decarbonisation pathway would reduce the national cost of energy from today’s level, equivalent to around 10% of GDP, to between 5% - 6% by 2050.
The government’s Clean Power 2030 Action Plan therefore aims to triple offshore wind and solar capacity and double onshore wind by the end of the decade, alongside growing the UK’s domestic supply chain to ensure more energy is “home grown”. Demand-side response must also increase from around 2GW today to as much as 12GW. Achieving this transformation will require clean power investment of £40–50 billion annually between 2025 and 2030. While upfront system costs may be higher than a fossil fuel heavy alternative, the long term benefit is a far more resilient energy system with significantly reduced exposure to gas price volatility.
Solar energy in particular will be central to this transition. Adding around 32GW of solar capacity by 2030 would represent one of the UK’s largest expansions of generation capacity in history. Solar can be deployed rapidly, at scale, and once operational its output is not linked to global fuel markets. Supported by 18–22GW of battery storage, solar generation can reduce reliance on gas fired plants during periods of low renewable output. Every additional gigawatt of solar reduces demand for imported fossil fuels, strengthens the UK’s trade position and weakens the link between international gas markets and UK household bills.
Reforming the energy system to enable long term resilience
The same themes were strongly echoed in the Select Committee hearing, where both the regulator and the system operator emphasised that blaming the energy transition for current price spikes is simply incorrect. On the contrary, the transition is the solution: it offers the UK control over its supply and price, in contrast to oil and gas, which are traded globally and vulnerable to conflict driven volatility.
The Committee also discussed structural reforms needed in the wider energy system. Much of the current framework was built in the late 1980s and no longer meets the needs of a modern, decentralised, low carbon system.
The message from regulators, system operators and energy market data is unequivocal: the clean energy transition is no longer just a climate imperative; it is a matter of sound economics and national security.
In a world defined by geopolitical uncertainty, accelerating investment in renewable energy, storage and grid infrastructure is how the UK builds long term resilience and protects consumers from the instability of global fossil fuel markets.
To find out how Downing is investing in solar, storage and grid infrastructure to help build a more secure and resilient UK energy system, please get in touch with our Energy & Infrastructure team.
Share
Contents
See full contents
Why accelerating renewable energy deployment is essential for protecting the UK from global energy shocks by Tom Williams, Head of Energy & Infrastructure, and Coos Battjes, Energy Markets Specialist, Downing.
The past several years have underscored a stark reality: geopolitical instability translates directly into energy price volatility. Escalating conflict in the Middle East, renewed tensions between major powers and disruptions to global fuel supply chains have all pushed up fossil fuel prices, exposing the UK’s continued vulnerability to external price shocks. Recent market movements linked to risks around the Strait of Hormuz and Qatar’s temporary halt in LNG production, as Qatar represents roughly 20% of global LNG supply, illustrate the sensitivity of global gas markets to geopolitical events.
The UK experienced one of the clearest examples of this exposure during the post Covid recovery and the upheaval following Russia’s invasion of Ukraine. Wholesale gas prices, which averaged around 40–60p per Therm in mid 2021, surged to 454p per Therm by early March 2022. Although the UK imported only around 5% of its gas directly from Russia, prior to the invasion, approximately 40% of Europe’s gas supply was dependent on Russian pipeline imports. The UK was not immune to the price shocks because both the UK and EU reference prices are set at the Dutch TTF hub. The sharp decline of these flows drove TTF prices sharply higher, with UK prices following suit. The resulting shock sent 30 UK suppliers into administration and forced the government to spend over £35 billion in support for households.
The UK’s declining domestic fossil fuel production compounds this vulnerability. The North Sea is now a mature basin and in long-term decline. Oil output in 2024 was 76% below 2000 levels and is projected to fall to just 2% of 2000 levels by 2050 or 4% with new licences. As OFGEM and the National Energy System Operator (NESO) recently highlighted to Parliament’s Energy Security and Net Zero Select Committee, North Sea production is simply too small a share of global output to cover domestic demand or even influence domestic energy prices. Increasing licensing cannot deliver energy independence, nor can it protect the UK from international price volatility.
Clean power as the UK’s strongest defence against volatility
It is within this context that the case for accelerating the clean energy transition becomes, overwhelmingly, an issue of economic security. During the Committee’s recent session on the Cost of Energy, both OFGEM Chief Executive Jonathan Brearley and NESO Chief Executive Fintan Slye made clear that meeting the government’s Clean Power 2030 target is the UK’s strongest defence against future price shocks of the type triggered by the Iran conflict or the 2022 Russian invasion of Ukraine. NESO further confirmed that following its decarbonisation pathway would reduce the national cost of energy from today’s level, equivalent to around 10% of GDP, to between 5% - 6% by 2050.
The government’s Clean Power 2030 Action Plan therefore aims to triple offshore wind and solar capacity and double onshore wind by the end of the decade, alongside growing the UK’s domestic supply chain to ensure more energy is “home grown”. Demand-side response must also increase from around 2GW today to as much as 12GW. Achieving this transformation will require clean power investment of £40–50 billion annually between 2025 and 2030. While upfront system costs may be higher than a fossil fuel heavy alternative, the long term benefit is a far more resilient energy system with significantly reduced exposure to gas price volatility.
Solar energy in particular will be central to this transition. Adding around 32GW of solar capacity by 2030 would represent one of the UK’s largest expansions of generation capacity in history. Solar can be deployed rapidly, at scale, and once operational its output is not linked to global fuel markets. Supported by 18–22GW of battery storage, solar generation can reduce reliance on gas fired plants during periods of low renewable output. Every additional gigawatt of solar reduces demand for imported fossil fuels, strengthens the UK’s trade position and weakens the link between international gas markets and UK household bills.
Reforming the energy system to enable long term resilience
The same themes were strongly echoed in the Select Committee hearing, where both the regulator and the system operator emphasised that blaming the energy transition for current price spikes is simply incorrect. On the contrary, the transition is the solution: it offers the UK control over its supply and price, in contrast to oil and gas, which are traded globally and vulnerable to conflict driven volatility.
The Committee also discussed structural reforms needed in the wider energy system. Much of the current framework was built in the late 1980s and no longer meets the needs of a modern, decentralised, low carbon system.
The message from regulators, system operators and energy market data is unequivocal: the clean energy transition is no longer just a climate imperative; it is a matter of sound economics and national security.
In a world defined by geopolitical uncertainty, accelerating investment in renewable energy, storage and grid infrastructure is how the UK builds long term resilience and protects consumers from the instability of global fossil fuel markets.
To find out how Downing is investing in solar, storage and grid infrastructure to help build a more secure and resilient UK energy system, please get in touch with our Energy & Infrastructure team.
Share
Why accelerating renewable energy deployment is essential for protecting the UK from global energy shocks by Tom Williams, Head of Energy & Infrastructure, and Coos Battjes, Energy Markets Specialist, Downing.
The past several years have underscored a stark reality: geopolitical instability translates directly into energy price volatility. Escalating conflict in the Middle East, renewed tensions between major powers and disruptions to global fuel supply chains have all pushed up fossil fuel prices, exposing the UK’s continued vulnerability to external price shocks. Recent market movements linked to risks around the Strait of Hormuz and Qatar’s temporary halt in LNG production, as Qatar represents roughly 20% of global LNG supply, illustrate the sensitivity of global gas markets to geopolitical events.
The UK experienced one of the clearest examples of this exposure during the post Covid recovery and the upheaval following Russia’s invasion of Ukraine. Wholesale gas prices, which averaged around 40–60p per Therm in mid 2021, surged to 454p per Therm by early March 2022. Although the UK imported only around 5% of its gas directly from Russia, prior to the invasion, approximately 40% of Europe’s gas supply was dependent on Russian pipeline imports. The UK was not immune to the price shocks because both the UK and EU reference prices are set at the Dutch TTF hub. The sharp decline of these flows drove TTF prices sharply higher, with UK prices following suit. The resulting shock sent 30 UK suppliers into administration and forced the government to spend over £35 billion in support for households.
The UK’s declining domestic fossil fuel production compounds this vulnerability. The North Sea is now a mature basin and in long-term decline. Oil output in 2024 was 76% below 2000 levels and is projected to fall to just 2% of 2000 levels by 2050 or 4% with new licences. As OFGEM and the National Energy System Operator (NESO) recently highlighted to Parliament’s Energy Security and Net Zero Select Committee, North Sea production is simply too small a share of global output to cover domestic demand or even influence domestic energy prices. Increasing licensing cannot deliver energy independence, nor can it protect the UK from international price volatility.
Clean power as the UK’s strongest defence against volatility
It is within this context that the case for accelerating the clean energy transition becomes, overwhelmingly, an issue of economic security. During the Committee’s recent session on the Cost of Energy, both OFGEM Chief Executive Jonathan Brearley and NESO Chief Executive Fintan Slye made clear that meeting the government’s Clean Power 2030 target is the UK’s strongest defence against future price shocks of the type triggered by the Iran conflict or the 2022 Russian invasion of Ukraine. NESO further confirmed that following its decarbonisation pathway would reduce the national cost of energy from today’s level, equivalent to around 10% of GDP, to between 5% - 6% by 2050.
The government’s Clean Power 2030 Action Plan therefore aims to triple offshore wind and solar capacity and double onshore wind by the end of the decade, alongside growing the UK’s domestic supply chain to ensure more energy is “home grown”. Demand-side response must also increase from around 2GW today to as much as 12GW. Achieving this transformation will require clean power investment of £40–50 billion annually between 2025 and 2030. While upfront system costs may be higher than a fossil fuel heavy alternative, the long term benefit is a far more resilient energy system with significantly reduced exposure to gas price volatility.
Solar energy in particular will be central to this transition. Adding around 32GW of solar capacity by 2030 would represent one of the UK’s largest expansions of generation capacity in history. Solar can be deployed rapidly, at scale, and once operational its output is not linked to global fuel markets. Supported by 18–22GW of battery storage, solar generation can reduce reliance on gas fired plants during periods of low renewable output. Every additional gigawatt of solar reduces demand for imported fossil fuels, strengthens the UK’s trade position and weakens the link between international gas markets and UK household bills.
Reforming the energy system to enable long term resilience
The same themes were strongly echoed in the Select Committee hearing, where both the regulator and the system operator emphasised that blaming the energy transition for current price spikes is simply incorrect. On the contrary, the transition is the solution: it offers the UK control over its supply and price, in contrast to oil and gas, which are traded globally and vulnerable to conflict driven volatility.
The Committee also discussed structural reforms needed in the wider energy system. Much of the current framework was built in the late 1980s and no longer meets the needs of a modern, decentralised, low carbon system.
The message from regulators, system operators and energy market data is unequivocal: the clean energy transition is no longer just a climate imperative; it is a matter of sound economics and national security.
In a world defined by geopolitical uncertainty, accelerating investment in renewable energy, storage and grid infrastructure is how the UK builds long term resilience and protects consumers from the instability of global fossil fuel markets.
To find out how Downing is investing in solar, storage and grid infrastructure to help build a more secure and resilient UK energy system, please get in touch with our Energy & Infrastructure team.
Share
The past several years have underscored a stark reality: geopolitical instability translates directly into energy price volatility. Escalating conflict in the Middle East, renewed tensions between major powers and disruptions to global fuel supply chains have all pushed up fossil fuel prices, exposing the UK’s continued vulnerability to external price shocks. Recent market movements linked to risks around the Strait of Hormuz and Qatar’s temporary halt in LNG production, as Qatar represents roughly 20% of global LNG supply, illustrate the sensitivity of global gas markets to geopolitical events.
The UK experienced one of the clearest examples of this exposure during the post Covid recovery and the upheaval following Russia’s invasion of Ukraine. Wholesale gas prices, which averaged around 40–60p per Therm in mid 2021, surged to 454p per Therm by early March 2022. Although the UK imported only around 5% of its gas directly from Russia, prior to the invasion, approximately 40% of Europe’s gas supply was dependent on Russian pipeline imports. The UK was not immune to the price shocks because both the UK and EU reference prices are set at the Dutch TTF hub. The sharp decline of these flows drove TTF prices sharply higher, with UK prices following suit. The resulting shock sent 30 UK suppliers into administration and forced the government to spend over £35 billion in support for households.
The UK’s declining domestic fossil fuel production compounds this vulnerability. The North Sea is now a mature basin and in long-term decline. Oil output in 2024 was 76% below 2000 levels and is projected to fall to just 2% of 2000 levels by 2050 or 4% with new licences. As OFGEM and the National Energy System Operator (NESO) recently highlighted to Parliament’s Energy Security and Net Zero Select Committee, North Sea production is simply too small a share of global output to cover domestic demand or even influence domestic energy prices. Increasing licensing cannot deliver energy independence, nor can it protect the UK from international price volatility.
Clean power as the UK’s strongest defence against volatility
It is within this context that the case for accelerating the clean energy transition becomes, overwhelmingly, an issue of economic security. During the Committee’s recent session on the Cost of Energy, both OFGEM Chief Executive Jonathan Brearley and NESO Chief Executive Fintan Slye made clear that meeting the government’s Clean Power 2030 target is the UK’s strongest defence against future price shocks of the type triggered by the Iran conflict or the 2022 Russian invasion of Ukraine. NESO further confirmed that following its decarbonisation pathway would reduce the national cost of energy from today’s level, equivalent to around 10% of GDP, to between 5% - 6% by 2050.
The government’s Clean Power 2030 Action Plan therefore aims to triple offshore wind and solar capacity and double onshore wind by the end of the decade, alongside growing the UK’s domestic supply chain to ensure more energy is “home grown”. Demand-side response must also increase from around 2GW today to as much as 12GW. Achieving this transformation will require clean power investment of £40–50 billion annually between 2025 and 2030. While upfront system costs may be higher than a fossil fuel heavy alternative, the long term benefit is a far more resilient energy system with significantly reduced exposure to gas price volatility.
Solar energy in particular will be central to this transition. Adding around 32GW of solar capacity by 2030 would represent one of the UK’s largest expansions of generation capacity in history. Solar can be deployed rapidly, at scale, and once operational its output is not linked to global fuel markets. Supported by 18–22GW of battery storage, solar generation can reduce reliance on gas fired plants during periods of low renewable output. Every additional gigawatt of solar reduces demand for imported fossil fuels, strengthens the UK’s trade position and weakens the link between international gas markets and UK household bills.
Reforming the energy system to enable long term resilience
The same themes were strongly echoed in the Select Committee hearing, where both the regulator and the system operator emphasised that blaming the energy transition for current price spikes is simply incorrect. On the contrary, the transition is the solution: it offers the UK control over its supply and price, in contrast to oil and gas, which are traded globally and vulnerable to conflict driven volatility.
The Committee also discussed structural reforms needed in the wider energy system. Much of the current framework was built in the late 1980s and no longer meets the needs of a modern, decentralised, low carbon system.
The message from regulators, system operators and energy market data is unequivocal: the clean energy transition is no longer just a climate imperative; it is a matter of sound economics and national security.
In a world defined by geopolitical uncertainty, accelerating investment in renewable energy, storage and grid infrastructure is how the UK builds long term resilience and protects consumers from the instability of global fossil fuel markets.
To find out how Downing is investing in solar, storage and grid infrastructure to help build a more secure and resilient UK energy system, please get in touch with our Energy & Infrastructure team.
Please fill out the form to download the full report
Share
Sign up to stay up to date with the latest insights and investment opportunities
Learn more
Downing LLP does not provide advice or make personal recommendations and investors are strongly urged to seek independent advice before investing. Investments offered on this website carry a higher risk than many other types of investment and prospective investors should be aware that capital is at risk and the value of their investment may go down as well as up. Any investment should only be made on the basis of the relevant product literature and your attention is drawn to the risk, fees and taxation factors contained therein. Tax treatment depends on individual circumstances of each investor and may be subject to change in the future. Past performance is not a reliable indicator of future performance. Downing LLP is authorised and regulated by the Financial Conduct Authority (Firm Reference Number 545025). Registered in England No. OC341575. Registered Office: Downing, 10 Lower Thames Street, London, EC3R 6AF.
VAT Number: 112 940 149
