UK Prime Minister Starmer resigns after steering ambitious clean power agenda

UK Prime Minister Keir Starmer announced his resignation June 22, bringing to a close a two-year tenure marked by an aggressive push to decarbonize Britain's power sector and by persistent concerns over high energy costs.

Nominations for Starmer's successor are to open July 9, with a new leader in place before parliament returns from its summer recess in September.

Andy Burnham, the former mayor of Greater Manchester who re-entered parliament on June 19, confirmed his intention to run for leader shortly after Starmer resigned.

The outgoing prime minister, who led the Labour Party to a landslide general election victory in July 2024, departs having ushered in a swath of ambitious policies aimed at achieving a 95% clean power system by 2030.

Starmer's government established the state-owned Great British Energy, lifted an effective ban on onshore wind development in England, streamlined permitting processes and unblocked grid connection queues for clean energy projects, completed the UK's largest-ever auction for renewables support contracts, and invested heavily in new and existing nuclear power.

"The mission-led approach to energy is one of the successes of this government," Maf Smith, founding director of advisory firm Lumen Energy & Environment, told Platts, part of S&P Global Energy. "The power sector has been an area where the government has had a clear plan and where it has moved fast to make a difference. Effectively, Starmer enabled [Energy Secretary Ed] Miliband to get on and deliver real change."

Despite clear progress, Starmer and Miliband's clean power mission has been "controversial and widely regarded ... as too ambitious to be realized as planned," according to Glenn Rickson, associate director of short-term European power analysis at S&P Global Energy CERA.

CERA analysts estimate that unabated gas will account for around 19% of domestic generation in the UK by 2030, rather than the targeted 5% under the clean power plan. However, that is still sharply down from roughly 35% in 2023, the last full year before Labour's election victory, Rickson noted.

The UK's broader ambition to reach net-zero by 2050 also encountered significant political resistance during Starmer's premiership, most notably from the Conservative Party, which originally legislated for the target but then abandoned its support, and the right-wing populist party Reform UK.

The pushback comes amid soaring UK energy costs — a trend exacerbated by the war in the Middle East — leading Starmer's government to outline measures in April to reduce the link between electricity and volatile gas prices.

Smith noted that Starmer's successor "needs to be clear how things have changed in the last two years."

"There needs to be a greater focus on electrification, not just decarbonization, to really help the UK, and that means concerted actions to cut the cost of electricity for business and domestic consumers," Smith said. "Braver and more fundamental actions than we've seen so far will be needed to do this."

Continental recoupling

Starmer and Miliband inherited a UK offshore wind industry grappling with significant cost increases. But after two successful auction rounds, installed capacity is now set to double to about 32 gigawatts by the end of 2028, according to S&P Global Energy Horizons.

The additions will help ease power prices, which are still some of Europe's highest in the wholesale market, while UK households and industry face some of the world's highest power bills.

Platts assessed UK third-quarter baseload power at GBP93.65/megawatt-hour, with only Ireland having a higher wholesale price among its neighbors.

However, summer 2028 was last assessed at GBP62.15/MWh, reflecting rising shares of renewables in the UK power mix as well as the decision to cancel an additional carbon tax on power generators from April 2028.

This will make the timelines of decisions at the UK-EU summit in Brussels on July 22 essential, with UK gas-fired generators at the moment facing a sharp increase in demand from April 2028 due to the significant discount of UK carbon prices over those of the EU.

On that basis, CERA analysts forecast that the UK would become a net power exporter in late 2028, including via a new interconnector to Germany. This would also significantly lift UK gas burn and could have implications on price.

The UK already has over 10 GW of power interconnectors, with only Ireland a net importer.

Succession uncertainty looms

Commentators see a new UK prime minister being accompanied by a ministerial reshuffle, including a potential change at the helm of the Department for Energy Security and Net-Zero.

Miliband, the current energy secretary and himself a former Labour leader, has been mooted as a potential chancellor of the exchequer should Burnham become prime minister.

Adam Bell, a partner at consultancy Stonehaven, highlighted Starmer's unwavering support for Miliband as a defining feature of his premiership.

"In the face of considerable pushback from across the media on the cost of energy, [Starmer] has maintained a political firewall around the decarbonization agenda that seemingly nothing could cross," Bell told Platts. "The 2024 manifesto commitment to decarbonizing power by 2030 has held."

Bell cautioned that an incoming prime minister might "not have quite the same focus" on clean power, alluding to comments by Burnham around exerting greater "public control" over sectors like energy, water, housing and transport.

"If [Starmer's successor has] to spend political capital on taking assets into public ownership, this might make protecting the decarbonization agenda not quite as straightforward," Bell said.