tech2035: Wired for Growth - Why Britain’s Economic Strategy Hinges on Its Energy Infrastructure

Britain’s industrial and economic future is increasingly wired into the success, or failure, of its energy infrastructure. Amid sweeping reforms and lofty targets, such as delivering net zero by 2030, the UK finds itself at a critical inflection point where the policies governing energy planning, investment, and market design are becoming decisive levers for national competitiveness.

Energy is no longer viewed merely as a utility issue but as a foundational platform for industrial renewal and productivity. According to the Office for National Statistics, infrastructure investment is a leading determinant of productivity, yet the UK faces a staggering £600 billion funding gap by 2030 to meet energy transition goals, only half of the estimated £1.3 trillion required is expected from current investment sources. As such, the forthcoming Pension Schemes Bill, mandating a share of pension capital be allocated to UK infrastructure, is expected to unlock £50 billion to help bridge this gap.

Yet regulatory uncertainty looms large. Some developers face grid connection delays of up to 11 years under the dysfunctional “first-come, first-served” model. As the new grid connection reform kicks in with hopes that we will see resolution as soon as end of this year. A 2024 Energy UK report estimates delays like this could cost the economy over £15 billion annually in lost economic activity. Over 700 GW of renewable projects remain stuck in the connection pipeline, and political infighting over how to achieve net zero is sowing further doubt among investors. While the government promises rapid decarbonisation through public investment, Conservatives promote a slower, “pragmatic” approach, and Reform UK seeks to dismantle net zero targets altogether. Each narrative sending mixed signals to the markets.

Policymakers, regulators, and investors now acknowledge that without coordinated, large-scale investment in grid capacity, storage, and low-carbon generation, ambitions for clean growth risk becoming stranded in bureaucratic inertia. Yet the regulatory frameworks governing energy remain caught between short-term market logic and long-term system planning.

Compounding the issue, a recent survey revealed that only 22% of energy companies anticipate workforce growth in the UK, while 65% expect increases abroad by 2030, indicating a potential "skills offshoring" trend. This shift not only threatens domestic employment but also undermines the UK's ability to meet its net-zero goals.

Grid Connection and Energy Costs

The Clean Power 2030 initiative and NESO’s reforms aim to clear “zombie” projects from the grid queue and prioritise “ready” ones that align with strategic national plans. But these reforms risk offering accelerated connection dates based on assumptions about transmission upgrades that may never materialise. Without reforms to optimise existing network use, utilising digital solutions, or accelerate new delivery, developers may be lured forward only to face repeated deferrals and stranded assets. Further uncertainties loom around demand projects and their position on the queue. Some Data Centre operators, although pursuing PPAs lasting 25 years, are being unable to connect on contractual dates with delays sometimes escalating by over 7 years, which affects the services they provide as an economic powerhouse being the physical foundation of the UK’s digital ambitions. Alongside grid connection delays, UK’s industries are paying the highest energy prices in Europe.

The rising cost of electricity is already having a cascading effect on digital businesses. With 78% of UK enterprises relying on cloud based services, increased energy costs get passed down the supply chain, raising prices for businesses and consumers alike. AI and HPC workloads, where both of which require substantial computational power—are particularly vulnerable. Without energy cost stability, AI development in the UK will struggle to remain competitive, as firms seek cheaper and more predictable energy markets abroad.

Create Efficiency Through Digital Adoption

Organisations like techUK and Energy Systems Catapult stress that this is not just a technical problem, it’s an industrial policy challenge. Organisations like ours argue for embedding flexibility, digital innovation, and integrated planning into regulatory design. With renewable capacity growth in the UK averaging just 4.45% over the last three years, far behind the global average of 9.67% the need for a joined-up strategy is now urgent.

Digitalisation is rapidly becoming the foundation of the UK’s future energy system, offering both systemic and consumer benefits. Smart grid technologies, including advanced software and hardware, have the potential to improve grid efficiency by 20–30%, providing not just operational gains but a pathway to a more resilient and forward-looking energy infrastructure.

Beyond the grid itself, digital platforms are enabling consumers to take an active role in the energy market, optimising usage and lowering costs. However, unlocking these benefits depends on creating the right regulatory environment that supports innovation and responsiveness. Investing in digital solutions now is critical, not only to avoid unnecessary and costly physical infrastructure, but to ensure the system is flexible enough to meet the dynamic demands of a decarbonised, decentralised energy future.

In short, the future of UK industry may be decided not just in boardrooms or innovation hubs, but in the bureaucratic trenches of planning frameworks, grid reform consultations, and pension fund mandates. The choice is clear: align energy with industrial strategy or risk powering down Britain’s economic potential.

Climate, Environment and Sustainability Programme activities

The techUK Climate Programme provides opportunities for members to present tech solutions that assist carbon emission reduction, circularity, and human rights goals. We also help our members with their own net zero transition, including measurement, implementation, compliance, and reporting. Visit the programme page here.