The coal era is over, but the outdated fossil fuel market is still hurting business, says Joe McDonald, CEO and co-founder of tem.energy.
After the last coal power station in the UK shut down late last year, the country should be celebrating another step toward a clean energy future.
But for many British businesses, the transition to renewable energy has come at a steep price – financially and environmentally.
Despite our strides in renewable infrastructure, the UK energy market remains held back by an outdated wholesale system. We’re not where we need to be, but all is not lost.
By embracing meaningful reform, we can empower businesses and unlock a sustainable future, making the clean energy transition both achievable and beneficial for all.
Where the system falls short
Since we launched our AI-driven solution to the big energy problem, our data has uncovered the troubling reality: UK businesses are losing around £216 million to energy market inefficiencies every month.
That amounts to £2.6 billion across the year. These costs, passed down to consumers, stifle growth and create barriers for businesses trying to reduce their carbon footprints.
The problem stems from legacy systems designed for a fossil fuel-based economy. These outdated systems impose a 25% premium on renewable energy, making it more – not less – expensive to adopt the solutions needed to tackle climate change.
Faced with the double burden of rising energy costs and prohibitively priced renewables, how can businesses be expected to fully embrace sustainability?
The environmental impact of these inefficiencies extends beyond businesses. Rising energy costs ripple through the entire economy, contributing to inflation in goods and services.
The so-called ‘green premium’ that businesses are forced to pay for renewable energy is ultimately passed on to consumers, putting paid to the idea that clean energy is an equitable solution for all.
The truth is that reform is needed so that the idea of green energy as a cost-effective, sustainable choice can become a reality.
A more efficient and transparent system is possible
While the UK grapples with the remnants of a fossil fuel-based market, Iceland shows us what a modernised renewable energy system might look like. 95% of its energy is derived from renewable sources – mainly geothermal and hydroelectric power.
This is possible thanks to bold policy decisions, long-term investment and a market designed to prioritise transparency and efficiency.
The key to Iceland’s success here is its single-market approach to energy. Renewables arenʼt competing against an outdated fossil fuel-based market; they practically are the market.
By investing in infrastructure and abandoning outdated subsidy systems, Iceland has made renewable energy an affordable option for both businesses and consumers.
Both in Iceland and in the UK, it’s not just about sourcing renewable energy, but also making sure it is delivered in a way that makes sense. Iceland shows us that, when supported by systems designed for the present, renewables can thrive.
Technology can put us on fast track
The UK urgently needs radical energy market reform. This means rethinking the role of intermediaries, modernising pricing mechanisms, and addressing the power imbalances that keep businesses and consumers locked into unfair deals.
A more transparent, competitive market would unlock huge financial savings, allowing businesses to reinvest in growth, innovation and sustainable practices. Environmentally, it would fast-track the UK’s shift to a low-carbon economy, helping meet climate targets while building a more resilient energy system.
Technology has a critical role to play in this reform. AI-driven platforms can eliminate inefficiencies and remove unnecessary intermediaries, democratising access to renewable energy.
By putting data at the forefront, we can reimagine an energy system that’s not only cheaper and better but fairer, more transparent and more trustworthy – that’s the future of energy.
The question is how fast we can move? The UK has the resources and technological know-how to lead the world in the renewables transition, but without systemic reform, we’ll continue to bear the hidden costs of an outdated energy market.
We have the will to build a clean energy future that benefits both businesses and the planet – so now let’s start working on the way.
