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Supply chains for low carbon electricity infrastructure

DOI: https://doi.org/10.58248/PN782 

The UK is transitioning towards low-carbon electricity to meet its net zero target and lower its dependencies on fossil fuels. However, renewable and low-carbon electricity technologies also depend on complex global supply chains for critical minerals, processed materials, specialised components and manufacturing capacity. Many of these supply chains are concentrated in a small number of countries, particularly China, creating potential risks to the availability and deployment of electricity infrastructure in the UK.

What constitutes electricity supply chains?

Low-carbon electricity supply chains can be broadly divided into the following stages:

• upstream (exploration and mining): mining provides raw minerals, including critical minerals, which are minerals essential for technologies required in electricity infrastructure (and other sectors) but are at risk of supply disruption
• midstream processing: any post-mining processing where value is added/minerals are upgraded from their mined state
• downstream manufacturing: the production of components and finished technologies
• end-of-life materials recovery as reverse supply chains
• services needed for electricity infrastructure installation and maintenance

What domestic capabilities does the UK have?

There are currently no active critical mineral mines in the UK, although over 50 mining, processing and recycling projects are being developed. Midstream processing exists in specialist areas, such as nickel and rare earth elements, but is small-scale. Recycling of energy technologies (such as batteries and wind turbines) could be a significant source of critical minerals. The UK has some manufacturing capacity (for example, in offshore wind) but relies on imports for high-value parts. The UK has a strong innovation sector in clean energy.

What are the main supply chain risks?

Low-carbon electricity supply chains are geographically concentrated. China dominates multiple stages, particularly refining (midstream), where it holds around 70% market share across most strategic minerals. This concentration can create risks. For example, following the introduction of Chinese export-licensing controls in early 2025, rare-earth magnet exports in May 2025 dropped by 75% compared with May 2024. Moreover, demand for these materials (processed minerals and semi-products) is increasing rapidly as multiple sectors compete for them and multiple countries expand electrification.

The downstream supply chain faces long lead times, but the exact mapping of the supply chain constraints across electricity sectors is yet to be published. Moreover, UK electricity distribution and transmission network operators are competing against European network operators to manufacture and deliver important network assets, particularly transformers.

What are the main constraints on creating domestic supply chains?

The biggest obstacles include high energy and labour costs in the UK, and a lack of long-term demand visibility. These make it difficult for suppliers to justify investing in new facilities and workforce expansion. The US and the EU have also created favourable regimes for investment in critical materials supply-chains, and the UK must compete against these. Skills shortages remain a cross-cutting challenge, with an estimated 131,700 additional workers needed in the UK electricity sector by 2030 (PDF). Developing improved visibility and confidence in future demand is a crucial aim detailed in the Electricity Networks Sector Growth Plan.

How could the UK increase supply chain resilience?

Stakeholders emphasise that the UK is unlikely to be competitive across all areas of the electricity infrastructure supply chain. Instead, it may benefit from focusing on areas where it has a comparative advantage or where strengthening domestic capability would most effectively enhance resilience and security. However, there are gaps in the analysis of how much of the supply the UK could secure domestically and what the areas of focus should be. Close collaboration between government and industry could help address these gaps.

Potential ways to increase low-carbon electricity supply chain resilience include:

• diversifying international suppliers
• making long-term strategic partnerships and offtake agreements
• ensuring long-term policy certainty
• identifying areas of focus for the UK’s domestic industry
• strengthening targeted domestic manufacturing in:
  • sectors identified by the Clean Energy Industries Sector Plan
  • advanced battery technologies
  • digital technologies including sensors, data platforms and digital twins for flexible electricity networks
• strengthening academia–industry collaboration to support commercialisation
• training the next generation of network staff
• increasing reuse, repair, remanufacturing, recycling and recovery of critical minerals and relevant components

What is UK Government policy?

The UK Government supports supply chains through policies including:

• the Clean Power 2030 Action Plan
• the Critical Minerals Strategy
• the Clean Energy Industries Sector Plan
• the Clean energy jobs plan

Financial mechanisms include Contracts for Difference (which guarantee fixed electricity prices for generators), the Great British Energy Funds, the National Wealth Fund and smaller supply-chain and port infrastructure funds.

Acknowledgements

This briefing was produced in consultation with experts and stakeholders, who are listed at the end of the briefing. The briefing was co-funded by Engineering and Physical Sciences Research Council. POST would like to thank everyone who contributed their expertise to this briefing.