Growing Requirements for Renewables and Challenges with Grid Infrastructure

As energy costs continue to rise year on year, businesses in the commercial, manufacturing, and Agri-environment sectors are facing significant challenges. The increasing energy prices are putting pressure on operational costs, reducing profit margins, and impacting productivity. According to the OECD, a 5% increase in energy prices can reduce productivity by approximately 0.4% one year later. This is particularly challenging for energy-intensive sectors such as manufacturing, farming, and food processing. For example, the National Farmers' Union (NFU) reported that energy costs for UK farmers increased by 20% in 2023, leading to reduced margins and productivity. Similarly, the food processing industry has seen a 15% rise in energy costs, impacting operational efficiency and profitability.

 "Farm businesses are increasingly becoming price takers, with our incomes becoming more volatile as direct payments disappear. It takes many months to produce food for the table, and during that time, unexpected variables can significantly impact whether there is a profit at the end of the day. Food security must be at the top of everyone's agenda, alongside the environmental impact of our practices. Energy is vital for production, and therefore, having a stable and reliable source is crucial for our operations. Emma Peplinski, Abbey Farm Holton.

As energy costs continue to rise commercial, manufacturing and Agri-environment sectors are turning to renewable energy solutions to mitigate these costs. At Carbon Point, we have witnessed a rise in demand for renewable technologies such as solar PV and battery storage systems. These technologies not only help businesses reduce their energy costs by unlocking them from the energy market but they also contribute to a more sustainable future.

According to the UK Government's latest renewable energy statistics, renewable sources provided 58% of the UK's electricity generation in 2024, up from 39.5% in 2023. In the East Midlands, renewable energy capacity has grown by 5.2% over the past year, reflecting the region's commitment to sustainable energy. Projections indicate that by 2030, renewables could account for over 50% of the UK's electricity generation, driven by continued investment and technological advancements.

A key driver of the growing demand for renewables, aside from rising energy costs, is the significant fall in the cost of renewable technologies. Over the past decade, the cost of solar photovoltaic (PV) technology has decreased by approximately 85%, while the cost of wind energy has fallen by around 55%. This reduction in costs has made renewable energy more accessible and economically viable for businesses. The International Energy Agency (IEA) now regards renewable energy as the cheapest source of electricity generation, surpassing traditional fossil fuels.

The IEA's findings highlight that solar PV and wind will account for 95% of global renewable expansion due to their lower generation costs compared to both fossil and non-fossil fuel alternatives. The IEA also projects that global renewable capacity will grow by 2.7 times by 2030, driven by supportive policies and market conditions. This growth is essential for meeting climate goals and ensuring energy security.

By adopting renewable energy, energy storage, and electric vehicle (EV) charging, businesses can significantly reduce their Scope 1, 2, and 3 emissions under the UN Greenhouse Gas (GHG) Protocol which provides a comprehensive framework for businesses to measure and manage their greenhouse gas emissions. This protocol encourages the use of clean energy technologies to lower direct emissions from owned or controlled sources, indirect emissions from purchased electricity, and other indirect emissions across the value chain.

However, despite the growing interest and investment in renewables, there are significant challenges that both renewables developers like Carbon Point and businesses face. One of the primary issues is the difficulty in securing connections to the national grid. The grid is currently struggling to meet the capacity requirements needed to integrate renewable technologies effectively. The UK's grid capacity for renewable energy is expected to increase by only 10% over the next five years, which may not be sufficient to meet the rising demand.

A recent project at Oakleigh Farm Stud highlights this challenge. Carbon Point successfully delivered a solar PV and battery storage system, but the local Distribution Network Operator (DNO) required the customer to install an export limitation of 13kW. This limitation was necessary to prevent overloading the network, but it also restricts the full potential of the renewable system. 

“The challenge for any business or home owner is that the commercial viability of investing in renewable energy is limited by revenue opportunities caused by the constraint in the energy export.  A large number of projects have been shelved because the grid connection is either taking too long, or not fit for purpose to justify the capital expense vs return.  It also questions the commitment of the policy environment which is committed to transition to a distributed low carbon energy generation supported by an electricity grid that supports the decentralised generation.” Mike Zehetmayr, Oakleigh Farm Stud.

To address these critical needs, the National Energy System Operator (NESO) has launched the Connections Reform consultation and the Clean Power 2030 plan. These initiatives aim to streamline the connections process and ensure that strategically aligned projects can connect to the grid efficiently. The Clean Power 2030 plan focuses on enhancing grid infrastructure and prioritising projects that contribute to the UK's goal of reaching net-zero emissions by 2050.

The policy framework under these initiatives is designed to enable rapid decarbonisation, placing a strong emphasis on renewable energy generation. By improving the connections process and supporting the development of renewable projects, the UK can accelerate its transition to a sustainable energy system.

However, the Clean Power 2030 plan faces several challenges. These include the need for a massive acceleration in the deployment of low-carbon technologies, with the current build rate far below the required 11.3GW per year needed to meet 2030 goals. Additionally, there are transmission network bottlenecks that must be addressed to fully utilise renewable energy sources. Urgent policy and market reforms are also necessary to reduce uncertainty for investors and ensure timely infrastructure upgrades.

To mitigate some of these challenges of grid connection constraints, businesses can adopt behind-the-meter (BtM) solutions for renewables. These may include:

1. Battery Storage Systems: These systems store excess energy generated on-site, which can be used during peak demand times or when grid supply is limited. This helps in managing energy costs and ensuring a reliable power supply.

2. Microgrids: These are localized grids that can operate independently or in conjunction with the main grid. They integrate various energy sources, including renewables, to provide stable and efficient power.

3. Demand Response Programs: These programs incentivize businesses to reduce or shift their energy usage during peak periods, helping to balance supply and demand on the grid.

4. Energy Management Systems: These systems optimize energy use by monitoring and controlling energy consumption, generation, and storage, ensuring efficient operation and cost savings.

5. Thermal Energy Storage: This involves storing energy in the form of heat or cold, which can be used for heating or cooling purposes later. It is particularly useful for industries with high thermal energy demands.

6. On-site Renewable Generation: Installing renewable energy systems like solar panels or wind turbines on-site can reduce dependency on the grid and provide a direct source of clean energy.

7. Power Purchase Agreements (PPAs): These agreements allow businesses to purchase renewable energy directly from a provider at a fixed rate, ensuring cost stability and supporting renewable energy projects.

Additionally, businesses could explore available government tax breaks and incentives for green investment. In 2025, the key incentives include the Enhanced Capital Allowance (ECA) scheme allows businesses to claim 100% first-year capital allowances on investments in energy-saving equipment and the Government's Smart Export Guarantee (SEG) ensures that businesses are paid for excess electricity exported back to the grid from renewable sources.

To implement these solutions, businesses can start by conducting an energy audit to identify their energy needs and potential areas for improvement. Partnering with renewable energy providers and consultants can help design and implement tailored solutions. Additionally, businesses should explore available government incentives and grants to offset initial investment costs.

At Carbon Point, we remain committed to supporting our customers in navigating these challenges and advocating for the necessary upgrades to the national grid. By working together, we can ensure that the benefits of renewable energy are fully realized, helping to reduce energy costs and promote environmental sustainability.

For more information on how Carbon Point can assist your business with renewable energy solutions, please contact: Divyesh@carbon-point.co.uk

UK Government Renewable Energy Statistics : Regional Renewable Electricity in 2023 : Statista Renewable Energy Projections : DNV UK Energy Transition Outlook : IEA Report on Renewable Energy Costs : Business Energy Investment Tax Credit : Enhanced Capital Allowance (ECA) Scheme : Smart Export Guarantee (SEG)

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© 2025 Carbon Point. All rights reserved. This article, "Growing Requirements for Renewables and Challenges with Grid Infrastructure," by Divyesh Jansari, is published with permission from Carbon Point. No part of this article may be reproduced, distributed, or transmitted in any form or by any means without the prior written permission of the author or Carbon Point. For permission requests, please contact: Divyesh@carbon-point.co.uk.