UK Energy Sector Outlook – Trends and Challenges for 2024

In our previous article we wrote about confidence returning to the UK energy sector. Over the last decade the outlook for capex in the energy and gas sectors in the UK has been primarily influenced by the drive toward renewable energy and decarbonisation. At Protel we cover process-intensive energy projects, and this article aims to explain some of the trends and challenges facing the sector in 2024 and the impact of these factors on capex projects.

UK Energy Sector Trends for 2024 – The Capex Project Picture

In 2024, we are seeing a great deal of energy from waste (EfW) projects entering the pipeline. There are far fewer planned anaerobic digestion (AD) plants in the pipeline, as a difficult approvals process and the emergence of better alternative uses of feedstock combine. As such, capex and feedstock once destined for AD is being diverted toward the production of biofuel.

Decarbonisation is the primary force behind the direction of energy & gas capex projects in 2024, as the UK grapples with the challenges presented by net zero legislation. As such, many energy facilities are being repurposed or redesigned with carbon capture or carbon minimisation in mind. Closed loop production and energy efficiency are near the forefront of manufacturers plans across all the main process sectors – and the energy and gas sectors are no exception.

Hydrogen is a huge growth area. At Protel we are tracking many cluster-based projects such as HyNet, Teesside and D2N2.

Challenges

Political uncertainty is one challenge facing the energy and gas sectors. Where previously the government was full tilt toward net zero, after the war in Ukraine and it’s highlighting of the importance of energy security, the foot has come off the throttle in recent months. There is also the looming general election in the UK in 2024 – which will doubtless have impacts on the UK governments net zero and decarbonisation plans and where investment and support is targeted.

The other main challenges include resource issues, price increases of raw materials and labour and global inflation. These factors impact on capex planning and implementation and are particularly challenging for long-term energy and gas sector projects with very long lead times and complicated approval processes.

Future Outlook for UK Energy Sector

Despite the challenges, the UK energy and gas sectors are buoyant. Emerging technologies and an economy-wide focus on decarbonisation are expected to continue to result in major capex programmes emerging throughout 2024.

R&D is a major focus for many organisations, as energy producers seek to capitalise on emerging (hydrogen) and existing technologies (biomass, biofuels, energy from waste) to help support the drive to net zero.  

Conclusion

Overall, the picture in 2024 for capex in the UK energy and gas sectors is positive. There is huge potential for suppliers of capital equipment and machinery, if they are able to leverage their solutions and technologies to the growth areas that align with the direction of travel in the UK economy.

As ever, relationships are paramount to create long-term mutually beneficial commercial partnerships. That all starts with making the right approach, to the right person – with messaging that fits their needs and addresses their challenges. Suppliers able to offer solutions that support energy efficiency or decarbonisation are one such example.

At Protel, we can help you achieve this – through use of our project bulletin service we have been helping suppliers succeed commercially for over 20 years.

Get in touch to discuss how we can help you.