There's a peculiar irony in the current state of renewable energy: just as wind and solar are finally hitting their stride technologically, confidence in our ability to achieve net-zero targets is cratering faster than a poorly planned energy policy. The optimism that carried us through the early 2020s has subsided, and it's not just the usual suspects having second thoughts.

The numbers tell a sobering story. Nearly half (44%) of energy and natural resources executives now expect the world to reach net-zero emissions by 2070 or later, a steep jump from the 31% that felt this way in 2024. Meanwhile, in the UK specifically, confidence has plummeted even more dramatically, with only 16% of senior energy executives believing we can hit net-zero by 2050, down from 45% just last year. That's not a correction; that's a collapse.

For energy retailers navigating this shifting landscape, the implications are profound. The comfortable assumptions about renewable growth rates that underpinned procurement strategies and customer propositions are being stress-tested by reality. How will retailers adapt to a world where the timeline is stretching and the path is getting bumpier?

The confidence erosion

The retreat from net-zero optimism isn't just about moving goalposts or political posturing. It reflects genuine structural challenges that have emerged as the renewable transition has entered industrial-scale deployment and come up against the tumult of modern energy. 

Policy instability sits at the heart of the problem. The situation in the US hardly needs explaining, with the current administration reversing numerous renewable-friendly policies at the federal level, while we covered the constant change at state level in a previous blog.

In the UK, politicians aren't unaligned, but external forces have made progress difficult. The UK’s big bet on natural gas as the foundation for the switch to renewables has blown up in their faces as the price spikes and furious consumers blame net-zero. At the same time, planning delays that would make Kafka weep have created an environment where long-term thinking feels like a luxury few can afford.

Across Europe, the regulatory landscape for renewables has become increasingly complex and unpredictable. Germany's struggles with its Energiewende and the persistent challenges around grid connection approvals all point to the same fundamental issue: governments promised a revolution but delivered bureaucracy.

The financing picture has become equally challenging. Renewable energy projects are vulnerable to interest rate hikes because developers must borrow large amounts of capital to cover the high upfront costs associated with building solar and wind farms. The era of cheap money that fueled the renewable boom of the 2010s is over, and the sector is struggling to adapt to the new financial reality.

Cost of capital

Perhaps nowhere is the confidence crisis more tangible than in project economics. The fundamental mathematics of renewable energy development has shifted dramatically as central banks worldwide have raised interest rates to combat inflation. A 2% increase in the risk-free interest rate pushes up the levelized cost of electricity for a renewables project by 20%, compared with only 11% for a combined cycle gas plant.

Projects that looked economically attractive at 2% interest rates become marginal or unviable at 5%. The result has been a wave of project cancellations, delays, and renegotiations that has rippled through the entire supply chain.

The impact extends beyond new development. Existing renewable assets, particularly those with variable debt structures, are seeing their cash flows squeezed just as they're supposed to be providing stable returns to investors. This has created a feedback loop where lower returns reduce appetite for new investment, which in turn slows deployment and keeps costs higher than they might otherwise be.

Supply chain inflation has compounded these challenges. The cost of steel, copper, and other critical materials has remained elevated, while geopolitical tensions have disrupted traditional procurement strategies. Solar panel prices, which fell consistently for over a decade, have shown signs of stabilization or even increases in some markets. Wind turbine costs have followed a similar pattern, with manufacturers struggling to maintain margins while managing complex international supply chains.

Retailer responses

For energy retailers, these macro trends translate into operational challenges that require immediate attention. The renewable growth assumptions that underpinned five-year business plans are looking increasingly optimistic, forcing a reassessment of procurement strategies and customer offerings.

The most immediate impact is on renewable energy certificate markets and power purchase agreement pricing. As new renewable capacity comes online more slowly than expected, the supply-demand balance for green energy products is tightening. At the same time, once surging demand levels are no longer guaranteed, with a recent report from Cornwall Insight in the UK finding falling Renewable Energy Guarantee of Origin prices were driven equally by supply restrictions and demand falls. Retailers who built customer propositions around affordable renewable energy are finding themselves caught between rising costs and price-sensitive customers.

Smart retailers are responding by diversifying their approach to decarbonization. Rather than relying solely on new renewable generation, many are investing more heavily in demand-side management and energy efficiency programs. These investments often offer more predictable returns than new generation projects and can deliver carbon reductions without waiting for planning approvals or grid connections.

The focus on efficiency extends beyond traditional conservation programs. Advanced analytics platforms like Gorilla are enabling retailers to optimize customer energy usage patterns in ways that reduce overall system costs while maintaining service quality. This includes everything from smart tariffs for electric vehicles to sophisticated demand response offerings that can help balance renewable intermittency.

Some retailers are also taking a more active role in renewable project development, either through direct investment or long-term partnerships with developers. This vertical integration approach allows them to secure renewable supply while potentially capturing development returns. However, it also exposes them to the same financing and development risks that have been challenging pure-play renewable developers.

Technology and data as confidence builders

While the macro environment for renewables has become more challenging, technological advancement continues to offer reasons for optimism. The falling costs of battery storage, improvements in forecasting accuracy, and new technologies to encourage flexibility are creating opportunities for retailers to differentiate themselves in the market.

Energy storage is particularly significant for retail strategy. As battery costs continue to decline, distributed storage becomes a viable tool for managing renewable intermittency at the customer level. Retailers who can aggregate customer-side storage into virtual power plants can create new revenue streams while providing grid services that support renewable integration.

Advanced forecasting capabilities are also proving valuable in managing renewable supply uncertainty. Modern prediction models can provide increasingly accurate forecasts of renewable generation several days in advance, allowing retailers to optimize their procurement strategies and reduce balancing costs. This predictive capability becomes even more valuable as renewable penetration increases and system-wide intermittency grows.

The integration of artificial intelligence and machine learning into energy management systems is enabling more sophisticated approaches to demand response and load management. These technologies can identify patterns in customer behavior that aren't visible through traditional analysis, creating opportunities to optimize system operation in ways that support renewable integration while maintaining customer satisfaction.

Retailers will need to address their technology portfolios to achieve these efficiencies, which could be a sticking point. Energy is a traditional, often slow-moving industry, with plenty of retailers still stuck with aging spreadsheets and other pieces of legacy tech. The Gorilla platform was created in part to address these challenges and enable energy retail to take the big leaps forward necessary to advance to net-zero. By taking control of your energy data, Gorilla acts as a multiplier making the rest of your architecture more efficient and capable of adapting to the need for things like AI. At the same time, specialized applications for pricing and forecasting take care of the immediate need for smarter green tariffs and greater accuracy.

Away from the question of energy data, customer communication also requires more nuance. The simple narrative that renewable energy would become consistently cheaper and more abundant is giving way to a more complex story about the challenges and opportunities of the energy transition. Retailers who can help customers understand these complexities while maintaining their commitment to cleaner energy will likely build stronger, more resilient customer relationships.

Perhaps most importantly, the confidence crisis should be seen as an opportunity to build more realistic and sustainable approaches to decarbonization. The overly optimistic timelines and cost assumptions of the early 2020s were never particularly credible to industry insiders. The current recalibration, while painful, may ultimately lead to more robust strategies that can deliver results over the longer term.

Looking forward 

The renewable energy sector is experiencing growing pains, not terminal illness. In 2025, renewables-based electricity generation overtakes coal-fired. In 2026, wind and solar power generation both surpass nuclear. These milestones represent genuine progress, even if they're not happening as quickly as some had hoped.

For energy retailers, the key is to maintain strategic focus on decarbonization while adapting tactics to current realities. This means continuing to invest in renewable supply relationships, but also building the operational flexibility to manage a more complex and uncertain transition period. It means engaging with customers about the real costs and benefits of clean energy, rather than overselling the simplicity of the transition. Technology will be a big part of this, and Gorilla is here to help. Get in touch today to see how the Gorilla platform reinforces the drive to net-zero.

The confidence crisis isn't necessarily a bad thing if it leads to more thoughtful, realistic approaches to achieving net-zero goals. The retailers who thrive in this environment will be those who can navigate uncertainty while maintaining their commitment to a cleaner energy future. After all, the destination hasn't changed, even if the journey is proving more challenging than expected.

The energy transition was never going to be a straight line from carbon-intensive to carbon-free. The current confidence crisis is a natural part of that journey, reflecting the growing pains of an industry learning to operate at scale in a complex world. The retailers who recognize this reality and adapt accordingly will be best positioned for success, both in the short term and over the longer path to net-zero.

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