Market Insight Report Highest green electricity generation in 2023

2023 was the greenest year on record for electricity generation in Britain, with 108TWh of volume generated by renewable sources ¹.

This was marginally higher than the 107TWh of renewable power generated in 2022. However, renewables share of the UK power mix (excluding imports) jumped from 40% last year to 46% in 2023. Non-renewable and low carbon electricity output declined by 23% and 14% respectively.

Record breaking green electricity generation

The combination of higher renewable electricity and lower non-renewable output in 2023, resulted in the lowest-ever carbon intensity year in the UK, with an average of 162g of carbon dioxide per KWh, according to Carbon Brief ².

Carbon Brief says that the decline in fossil fuel electricity generation has been caused by the rapid expansion of renewable energy (up six-fold since 2008) and by lower electricity demand (down 21% since 2008). The fall in demand has been driven mostly by a combination of more efficient appliances and lighting, high prices driven by gas and changes in the structure of the UK economy as it shifts to an ever more service-led rather than manufacturing-heavy economy.

Although, in the long term, electricity demand is expected to rise with transport and heating infrastructure becoming increasingly electrified with the introduction of electric vehicles and heat pumps.

UK Energy generation by fuel type

Overall, electricity output decreased by 5% YoY (year on year), with gas-fired power generation accounting for 38% of the mix, despite a 22% YoY decline. Wind power generation reached an all-time high in 2023 with 78.5TWh of volume and its share of the mix increased to 29% from 27% in 2022.

Green electricity sources

Wind electricity output broke records in 2023:

• 10 January saw the first record of the year, with wind generating over 21.6GW
• 21 December delivered the largest wind generation to date with a record 21.8GW
• The highest share of wind in the overall generation mix was on 19 November 2023 between 4:30am and 5am, at 69%

Nuclear power output reached 38TWh in 2023, 14% lower than in the previous year. The reduction in output was primarily caused by the temporary closure of four out of the five operational nuclear plants for planned maintenance ³.

Imports saw the largest increase in percentage terms ⁴ with volume doubling from 16TWh to 33TWh as the UK became a net importer of electricity in 2023 compared to 2022. Low electricity demand in Europe, higher Nordic hydroelectric output and the recovery of French nuclear production contributed to the switch.

Electricity produced by solar panels increased slightly from 12.6TWh to 12.9TWh YoY and accounted for 5% of the power mix. Biomass also accounted for 5% of the mix with 13TWh of volume generated in 2023, down by 11% from the previous year.

2023 confirmed as world's hottest year on record

The EU’s climate service has confirmed that 2023 was the warmest year on record globally ⁵, driven by human-caused climate change and boosted by the natural El Nino weather event.

A notable feature of the 2023 warmth is that it was felt pretty much worldwide. The UK experienced its second warmest year on record with a mean temperature of 9.97°C, just behind 2022’s figure of 10.03°C and ahead of 2014’s 9.88°C ⁶. For both Wales and Northern Ireland, 2023 was their hottest year on record.

With climate change not stopping and not waiting, the pressure on businesses to take environmental action is growing. However, whilst businesses recognise that they need to act to reduce carbon emissions, lack of funding and belief in green technology remain key barriers ⁷.

Businesses under pressure

More than one-third of businesses say they are increasingly under pressure to take environmental action by their stakeholders – such as customers, shareholders, investors and banks. They recognise that customers want to buy from organisations who demonstrate clear commitments to the environment. Access to funding for the energy transition is a challenge. Many businesses believe investment in green technology would not increase their productivity.

With interest rates remaining high, access to funds for the energy transition continues to pose a challenge for 43% of organisations. Close to three quarters of businesses say they plan to accelerate their net zero plans by redesigning their products and services (74%). This includes thinking about the impact that the product or service will have throughout its lifecycle.

Steps towards energy efficiency

Energy efficiency measures can help. Making your business as energy efficient as possible has two main benefits: it can help to reduce your energy bills, and it can reduce your carbon emissions, making your organisation more sustainable.

Businesses are also thinking about how they can generate their own energy. By generating on-site energy and investing in energy storage technologies, such as batteries, can protect businesses from intermittency issues associated with renewable resources, volatility in the energy market and get long-term certainty over business energy costs ⁸.

Net zero strategies need to account for a wide range of different risks. Businesses who don’t spend time planning how they will tackle these challenges may face more regulatory, operational, or cost pressures in the future.

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