Green, Clean and Secure: The New British Energy Security Strategy
2023 has been touted as the year of the UK’s divergence from the EU and what that means in practice is starting to take shape.
While the EU looks to be relaxing some of its Net Zero-inspired legislation, such as the blurring of the combustion engine ban, the UK appears to be holding ground. The UK Government has confirmed it will not change its course, much to the dismay of Conservative Party backbenchers who see many of these policies as financially punishing for voters at a time when many can least afford it.
The UK-EU political divergence provides an interesting backdrop against which to view the launch of the new ‘British Energy Security Strategy’, cementing the further security-focused nature of the current series of UK Government strategies. However, it did fail the Government’s test of encouraging business outside of the Oxford-London-Cambridge triangle as the Secretary of State, Grant Shapps, visited a fusion facility in Oxford on his broadcast round.
The Government unveiled plans to scale up affordable, green, homegrown power and build thriving sustainable industries in Britain. Part of the Government’s effort to drive forward energy security, reduce household bills in the long term and maintain the UK’s world-leading position in achieving Net Zero.
This update bolsters the original British Energy Security Strategy that was published in April 2022. It attempts to deal with the challenges brought by the rising global energy prices and the implications of geopolitical tensions, especially those the Russia-Ukraine conflict has had on international energy markets.
Nuclear, Nuclear, Nuclear
One of the key announcements will likely be welcome news for those in the nuclear industry and Conservative Party backbenchers. The Government aims to increase the percentage of UK electricity generated by nuclear sources by 2050, from 15% to 25%. However, with business relations hitting a new low point for the UK Government, many organisations will be watching to see if Whitehall will start to be a help rather than a hindrance.
Following the launch of Great British Nuclear (GBN), the strategy set out the key aims of the programme and what activities we can expect to see. The initial priority is to launch a competitive process to select the best Small Modular Reactor (SMR) technologies, starting in April 2023 with market engagement. The second phase will commence in Summer 2023 and will feature the down-selection process, resulting in a decision on the leading technologies by Autumn 2023.
Going hand-in-hand with the Chancellor’s vision to make the UK the next Silicon Valley, energy technology businesses should take note of the Government’s pledge to co-fund selected innovations to support technological development. Successful bidders will also be supported to ensure the appropriate infrastructure is in place, in line with the Government's commitment to take two Final Investment Decisions next parliament.
Faster Planning Processes
The UK’s planning system currently presents a significant barrier for infrastructure development across the country. However, businesses will be pleased to hear the Government has pledged to remove planning barriers to enable accelerated construction of energy infrastructure, including solar power and offshore wind projects. This is a significant step towards making the UK more attractive to investors in the energy sector.
To further bolster UK trade, the Government will be increasing the UK Export Finance’s maximum exposure limit from £50 billion to £60 billion. The changes will improve opportunities for businesses by simplifying the process to win contracts and secure payment, ultimately adding capacity to the support UK Export Finance can provide to exporters including in green industries.
To secure the UK's position as a leading manufacturer of electric vehicles, the announcement also set how the Government plans to build a stable environment for businesses to invest in the transition to electric vehicles and sustainable aviation fuel. The Review of the Electricity Market Arrangements (REMA) programme will consult this Autumn on reforms to the electricity market and provide a key engagement opportunity for businesses to feed into market longevity while influencing policy direction.
With economic outlooks currently remaining uncertain, this update is likely to be music to the ears of businesses in the energy sector and foreign investors to the UK. The Government is resolute in its approach to achieving its clean energy, Net Zero and sustainability goals, and with the next steps set out, these goals no longer seem like a pipe dream.