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"We've got the ambition, we've got the vision – and, with this plan, we are going to bring clean, affordable, secure power to the people for generations to come", reads the Prime Minister's forward to the British Energy Security Strategy, which was published on 7 April 2022. The strategy received mixed responses from the energy industry; but a common denominator of these responses is the acknowledgment of the ambitious targets embedded within the same.
In anticipation of the Queen's Speech on the 10th of May, which is likely to include a new energy bill, we are sharing below our thoughts on the strategy and the Government's direction of travel.
Reduction of energy demand at residential and commercial level is a low-hanging fruit in achieving the Government’s decarbonisation ambitions; yet little emphasis has been placed on measures that would achieve such reduction. Notably a number of measures recommended by think tank E3G (including the recommendation to bring forward the Future Homes Standard to 2023) have not found their way into the strategy.
Despite the cost and timeframe for deployment of onshore wind projects falling rapidly in recent years, onshore wind was noticeable by its absence. The Government has committed to launching a consultation later this year on how local communities can engage with these developments and demonstrate their support. In our experience, there is clear appetite for well sited, community-owned developments, which do not only deliver electricity at a lower cost but also create a sense of (comm)unity.
Strengthening planning policy in favour of the deployment of large scale solar on brownfield sites, encouraging co-location and spurring on the installation of residential rooftop solar pv, were all welcome announcements. Any new planning applications must also take account the biodiversity net-gain requirements under the Environment Act 2021. Some developers are already considering how the potential that large scale solar sites have for enhancing biodiversity above the 10% requirement, particularly on low grade agricultural land or brown field sites, may be monetised. Others will do it because it is ‘the right thing to do’.
Establishment of the Future Energy Operator and an emphasis on long-duration electricity storage solutions, are two further announcements that caught our attention. Whether the creation of a new body is going to deliver on the promise of accelerating the energy transition as opposed to creating more red-tape is an interesting question. As for long-duration energy storage, the Longer Duration Energy Storage Demonstration Programme has awarded funding to a wide range of projects (including to a project using vanadium flow battery technology), with the intention to provide proof of concept and pave the way to commercialisation.
Hydrogen has featured prominently as a key part of the energy mix. With an ambitious target of having “up to 10GW of low carbon hydrogen production capacity by 2030”, the Government promptly published its “Hydrogen investor roadmap: leading the way to net zero” with the aim of giving investors confidence of its commitment to the sector. This alongside, the “Net Zero Hydrogen Fund” (the competition for Strand 2 opened on 25 April 2022) and the Government’s “Low Carbon Hydrogen Business Model” (which is intended to follow a similar format as the Contracts for Difference), are intended to create an environment that is rife for investment.
We see a huge opportunity for the development of partnerships in this sector and in the next few weeks we will be sharing our thoughts on what makes a successful partnership.
It is true that the strategy does not go as far as we might wish but the ambitious targets and the level of innovation that is already emerging on the back of these, is very heartening indeed.
Look out over the next few weeks for further articles about the regulatory framework and the emerging market trends.
