The Government calls it the ‘biggest piece of energy legislation in UK history’. Ministers claim it is laying the foundations for an energy system fit for the future, but what’s the trade off between spin and real world implications?
The Act has been some time passing into law, following various personnel changes in government dating back to Liz Truss and the then Energy Secretary Kwasi Kwarteng.
It has also been highly influenced by geopolitics, energy pricing and a growing emphasis on energy security.
Nuclear
EDIE writes that by 2050, the UK is aiming to host up to 24GW of nuclear capacity, up from 6GW at present. The growth should be delivered using a mix of large projects, including one to come online this decade, and small modular reactors (SMRs).
The new Act gives Energy Security and Net Zero Secretary Claire Coutinho the power to designate a new publicly owned company, Great British Nuclear, to oversee the Government’s involvement in delivering the new nuclear projects.
She will also have the power to allocate additional financial assistance to the company going forward due to the Act. In return, Great British Nuclear is required to report annually to Coutinho and she must lay this report before Parliament.
Under the Act, Great British Nuclear’s objective is set out as, “Facilitating the design, construction, commissioning and operation of nuclear energy generation projects for the purpose of furthering any policies published by the Government.”
It all, theoretically, sets out a new nuclear future, originally envisioned by Boris Johnson. But nuclear power stations take a very long time to build, and are very hard both to finance and decommission.
Plenty of analysts doubt whether Great British Nuclear can be more than a headline, and actually guarantee promised success on nuclear capacity to schedule and safety.
Ofgem goes net zero
Sometimes the devil is in the detail. The Act restates Ofgem’s principal objective is to protect the interests of existing and future gas and electricity consumers.
The new detail is; a specific duty to do so by supporting the government to meet its legal obligation to get to net zero by 2050, as required by the Climate Change Act 2008.
Why does this matter, you might ask; if the inferred onus on Ofgem to push net zero was already there? Well, it has just been announced that Ofgem is setting up a network of regional planners to improve the UK’s energy transition, in a bid to secure greater resilience in bi-directional power flows, and speed the transition to Net Zero.
The analysis suggests Ofgem hopes these Regional Energy Strategic Planners (RESPs) will improve local energy planning and speed up the transition to Net Zero, by enabling a clear roadmap for how local energy systems need to be developed.
The RESPs will work in tangent with organisations at a local level, such as local governments and gas and electricity networks, to improve the understanding of what infrastructure is needed to boost net zero prospects and ultimately attract investment for projects.
All of this is made far less open to critique, debate or naysayers, via the opaque obligation for Ofgem to push net zero that the new Act creates. It’s hard for agencies like Ofgem to influence investment in this way without explicit approval.
£100 billion
A much lauded element of the Act promises to help unlock £100 billion of private investment in energy infrastructure and scale up jobs and growth.
It also promises to increase competition in Great Britain’s onshore electricity networks, through a new tender process, reducing costs for network operation and development. This new model is expected to save consumers up to £1 billion off their energy bills by 2050, says government.
Push and shove
When it comes to what the Act means for the UK’s clean energy future, the jury remains out. A good example of the dichotomy can be found within the REA’s responses.
REA welcomes the legal establishment of the Future Systems Operator for more joined up strategic energy systems planning, the Net Zero Mandate to Ofgem’s remit, plus regulation of heat networks and powers to enable government-supported business models for Hydrogen production and Bioenergy Carbon Capture and Storage (BECCS).
“The REA and industry partners collectively called for this Bill to be reintroduced since last summer when its progress through parliament was delayed by the political uncertainty in Westminster. This previous stalled legislation stifled investment and certainty; therefore the Bill receiving Royal Assent is indeed great news for the sector,” said Frank Gordon, Director of Policy at the REA.
“While we know that the entire energy transition still faces significant challenges which are currently delaying the roll out of low carbon technologies across all sectors, today’s news will be a catalyst for much needed action.”
Yet, the very same REA news pages contain blogs asking why The Kings Speech was so incompatible with net zero or energy security and oil and gas exploration.
And a guest piece on the REA pages says the renewable energy sector in the UK is at a major crossroads following the Prime Minister’s Net Zero U-turn.
‘By delaying the ban on the sale of new petrol and diesel cars from 2030 to 2035, and on the same day re-setting the statutory deadline for the decision on the 500MW Sunnica Energy Farm, the government has destroyed the clarity of policy that developers so badly need,’ it reads.
‘These announcements, coupled with the scrapping of the northern leg of HS2, have sent a clear signal across the sector and investment funds that UK regulatory certainty is gone.’
In conclusion, the Act is a crucial step towards an energy system fit for the future. But certainty on energy security and net zero are at risk unless government positioning remains consistent.