While the UK Autumn Budget 2025 (the 'Budget') was eagerly anticipated by many in the energy sector, it delivered a package of measures largely in line with expectations. There were no major surprises or radical shifts in policy, but rather a steady continuation of the government’s commitment to accelerating the energy transition, investing in infrastructure, and providing greater regulatory clarity.
In this overview, we break down the key energy-related announcements from the Budget and offer some practical analysis on what these changes could mean for businesses and stakeholders across the sector. The Autumn Budget 2025 sets out a roadmap that aims to balance fiscal sustainability with the need for innovation and growth.
Future Mobility
As widely anticipated, the government confirmed it would introduce an Electric Vehicle Excise Duty (eVED), a per-mile charge for electric and plug-in hybrid cars, but not until April 2028. Notably, the eVED will be set at around half the rate of fuel duty for the average petrol car driver (which itself is set to rise from 2026); and an initial scope limited only to cars (not commercial vehicles). DESNZ has launched a consultation on the design and implementation of the eVED alongside the Budget, open until March 2026. In partial offset to the eVED, VED Expensive Car Supplement threshold for zero-emission vehicles has been increased to £50,000 (from £40,000) from April 2026.
To further support the EV transition, the Electric Car Grant is set to receive a further £1.3 billion in funding and is extended to 2029-30. The government will also invest an extra £100m for home and workplace charger infrastructure and £100m for local authorities and public bodies to train and deploy specialist staff, accelerating the expansion of public charging infrastructure. The Budget confirmed a 10-year, 100% business rates relief for eligible EV charging points and EV-only forecourts, alongside a one-year extension to 100% First Year Allowances for EVs and charge points to 2027. Lastly, DESNZ are launching a consultation on permitted development rights to facilitate cross-pavement EV charging.
The Budget is clearly sending a strong message to strengthen the UK’s transition to electric vehicles by providing targeted funding and maintaining tax stability. While the move to equalise road-usage charges for EVs will be unwelcome to EV motorists or those considering their first EV purchase, it also recognises the confidence in the technology’s maturity as a consumer proposition and the ongoing transition towards electrified transport systems in the UK. Increased government support for EV adoption and charging infrastructure should reduce deployment and operating costs for charge point operators, helping to expand and improve the network, boost reliability, and advance the UK’s future mobility ambitions.
Low-Carbon Investment: Mobilising Capital for Net Zero
The Budget confirmed that the National Wealth Fund (NWF) is bridging bankability gaps and crowding in private capital, with £3.8bn deployed across 28 projects to date, leveraging £5.3bn in private investment. Highlighted projects included a £600m loan for Scottish Power grid upgrade (part of £1.35bn package) and equity investment in Cornish Metals to secure critical minerals.
The Government has updated its Green Finance Framework, marking a significant shift by allowing nuclear power projects to qualify for green gilts and Green Savings Bonds under strict eligibility criteria and exclusions. This inclusion reflects the strategic role nuclear energy is expected to play in achieving net zero (see below for further nuclear announcements), while maintaining rigorous sustainability standards.
The Budget also confirmed that the Green Finance Framework has been independently assessed by S&P Global Ratings and awarded a “dark green” rating—the highest possible classification—underscoring its alignment with robust environmental objectives and investor confidence in the UK’s green financing approach.
Industrial & Household Support
The Budget delivers a strong signal on industrial decarbonisation. The Budget announced a proposed exemption from the Climate Change Levy (CCL) for electricity consumed in green hydrogen production (subject to Parliamentary approval by Spring 2026). A targeted but meaningful cost lever for electrolytic projects.
Looking ahead, the Budget confirmed several measures designed to significantly reduce electricity costs for the industrial sector, including:
- a new British Industrial Competitiveness Scheme is set to launch in 2027, designed to cut eligible firms’ electricity costs by £35–£40/MWh, with consultation on its design and eligibility open until 19 January 2026.
- an uplift in network charging compensation for energy-intensive industries increased from 60% to 90% under the British Industry Supercharger scheme.
These proposals are designed to sharpen the UK’s industrial power price offer versus its EU peers and strengthen the UK’s industrial competitiveness.
At a household level, the Budget confirmed that the Government will cover 75% of the RO costs for three years starting in 2026/27, shifting these charges from consumer bills into general taxation. In addition, the Energy Company Obligation (ECO) levy will be removed, further reducing policy-driven costs on electricity bills. Complementing these measures, additional funding is to be provided under the Warm Homes Plan to support vulnerable households, ensuring affordability while maintaining progress on energy efficiency.
Nuclear Energy
The Budget reinforces nuclear energy’s central role in the UK’s long-term energy strategy. Wylfa in Anglesey has been confirmed as the site for the country’s first Small Modular Reactor (SMR) project with Rolls-Royce SMR pressurised water reactor technology, marking a major step toward deploying advanced nuclear technologies in the UK.
Regulatory reform is also on the agenda. The Government will implement the Nuclear Regulatory Taskforce’s recommendations, publishing a full implementation plan within three months of the Budget and delivering changes within two years (subject to legislation). These reforms may also include structural adjustments to better align civil and defence regulation and expand the remit of the ONR.
With Sizewell C having reached FID in summer 2025, the way is now paved for the construction of two EPR units producing circa 3.2GW of low-carbon electricity under the Regulated Asset Base (RAB) model. Under this model investors will receive a return on equity during the construction phases, thereby lowering the overall cost of capital resulting in greater value for money for consumers and the taxpayer. The addition of nuclear energy to the Green Finance Framework, as already touched on, signals strong investor confidence in nuclear as part of the UK’s net-zero pathway.
Oil & Gas
The Budget signals a continued attempt to manage a transition for the UK’s oil and gas sector. A Permanent Oil & Gas Price Mechanism (OGPM) will replace the Energy Profits Levy (EPL) when price thresholds are met, applying a 35% rate above benchmark levels—set for FY 2026/27 at $90 per barrel for oil and 90p per therm for gas, with annual CPI adjustments thereafter. Given that the OGPM only applies once EPL has fallen away, it would currently only come in before 2030 if there are two consecutive quarters where market prices (i.e. for each of oil and gas) are below the thresholds in the existing energy security investment mechanism. The rejection of the replacement of the EPL in 2026 has drawn heavy criticism from industry bodies, such as Offshore Energies UK (OEUK).
At the same time, the North Sea Future Plan confirms the end of new exploration licences, underscoring the Government’s manifesto commitments. To meet a stated goal of maintaining energy security and support existing operators, “Transitional Energy Certificates” will be introduced, allowing additional production from areas adjacent to existing fields (tie-backs).
What comes next?
The Budget sets out a clear direction for the UK energy sector, balancing fiscal sustainability, infrastructure investment, and regulatory reform.
However, much of the impact will hinge on legislative implementation and detailed scheme design, many of which remain subject to consultation or Parliamentary approval. Until these details are clarified, businesses and households alike face a degree of uncertainty—making it essential to monitor developments closely and prepare for both opportunities and compliance requirements as the policy landscape evolves.
