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UK REVIEW UK PLEDGES TO ACCELERATE GREEN GROWTH
UK REVIEW
UK PLEDGES TO ACCELERATE GREEN GROWTH
The UK has recently vowed to support continued investment in renewables and earmarked funding for clean energy manufacturing in a bid to boost Britain’s technologies and capacity generation that are expected to help deliver the net zero target.
Autumn Statement Vows To Boost Renewables
The government will support continued investment in the UK’s renewable generation capacity, Chancellor of the Exchequer Jeremy Hunt said in the Autumn Statement at the end of November.
The government will legislate for a new investment exemption for the so-called Electricity Generator Levy (EGL), under which new projects for which the substantive decision to proceed is made on or after 22 November 2023 will be exempt from the EGL.
The levy will end as planned on 31 March 2028.
“The government has also set out the parameters for the next renewables Contracts for Difference auction round, increasing the maximum price that can be received, and will shortly publish further details on growing hydrogen and Carbon Capture, Usage and Storage (CCUS) deployment, ensuring that the government’s world-leading clean energy deployment continues at pace and remains on track to meet the government’s energy security and net zero ambitions,” according to the statement.
In addition, to further speed up the UK’s world-leading offshore wind deployment, the government will bring forward legislation to provide the Crown Estate with borrowing and wider investment powers as soon as parliamentary time allows, which will help to unlock a further 20-30 gigawatts (GW) of new offshore wind seabed rights by 2030.
The UK government is currently working with The Crown Estate to bring forward additional floating wind in the Celtic Sea through the 2030s, which could see an additional 12 GW of generation deployed, alongside the 4.5 GW round due to open soon, with the potential to deliver £20 billion of direct investment from deployment in the area.
“This Autumn Statement will boost investment to support the government’s clear plans to deliver net zero and energy security objectives. UK firms are ready to supply vital goods and services to the new global green economy, maximising growth opportunities through the transition,” the Chancellor said.
The government also aims to address the long delays clean energy projects currently face in accessing the grid. New measures are expected to cut grid access delays by 90 percent and offer up to £10,000 off electricity bills over 10 years for those living closest to new transmission infrastructure, the Chancellor noted.
“Taken together these planning and grid reforms are estimated to accelerate around £90 billion of additional business investment over the next 10 years,” he added.
“To get Great Britain building and to deliver energy security and the net zero transition, the government will remove barriers to investment in critical infrastructure by reforming the UK’s inefficient planning system and speeding up electricity grid connection times,” the Autumn Statement says.
RenewableUK welcomed the measures for accelerating green growth in the Autumn Statement.
“There’s a strong focus in Chancellor’s Autumn Statement on accelerating green industrial growth. His announcement on permanent full expensing will provide a much-needed degree of long-term certainty for investors in green technologies, helping to make the UK an attractive destination for investment in clean energy projects and manufacturing,” RenewableUK’s Chief Executive Dan McGrail said.
“The decision to extend tax relief on freeports from five to ten years will help us to revitalise coastal communities by encouraging new investment in offshore wind manufacturing, including factories servicing innovative floating projects. Industry estimates that overall the offshore wind supply chain could boost the UK's economy by £92bn by 2040,” McGrail added.
“We look forward to further key announcements such as the publication in March of more details on next year’s CfD auction which we hope will secure a record annual amount of new clean energy capacity”.
In a response to the statement, Offshore Energies UK (OEUK) chief executive David Whitehouse said,
“The Chancellor hit the right notes today, now we must fully orchestrate our approach to making the UK an irresistible place in which to invest and innovate. The decarbonisation of our economy is one of the greatest challenges of our time, but we must also seize its opportunities.”
“The UK’s offshore energy industry has the skills, people and supply chains we must nurture to build a UK business-led energy transition. Today’s statement helps to give businesses the right conditions to invest in these critical components of our low carbon future and drive UK growth,” Whitehouse added.
Support for UK Clean Energy Manufacturing
A few days ahead of the Autumn Statement, the UK government announced £4.5 billion in funding for British manufacturing to increase investment in eight sectors across the UK. The funding will be available from 2025 for five years, providing industry with longer term certainty about their investments, the government said.
As part of the multi-billion-pound funding, the government has committed £960 million for a Green Industries Growth Accelerator to support clean energy manufacturing. The Green Industries Growth Accelerator investment is designed to support the expansion of strong, home-grown, clean energy supply chains across the UK, including carbon capture, utilisation and storage (CCUS), electricity networks, hydrogen, nuclear power, and offshore wind.
“This will enable the UK to seize growth opportunities through the transition to net zero, building on our world-leading decarbonisation track record and strong deployment offer,” the government said.
“GIGA will enable the UK to seize growth opportunities through the transition to net zero, unlocking private investment, protecting jobs and creating new ones, and leveraging impact across the wider supply chain,” according to the Autumn Statement.
Commenting on the announcement of the Green Industries Growth Accelerator, the CoChair of the Offshore Wind Industry Council (OWIC), Richard Sandford, said:
“The measures announced by the Government today will help us to scale up the UK’s offshore wind supply chain faster in the face of unprecedented international competition for
investment in new manufacturing facilities. This will not only enable us to supply projects in UK waters but also to export our world-class offshore wind products and services globally, where they are already in great demand.”
Boost for Offshore Wind
Following a flop in the offshore wind auction earlier this year, the government increased in November the maximum price for offshore wind projects in its flagship renewables scheme, the Contracts for Difference (CfD) auction.
The maximum strike price has been increased by 66% for offshore wind projects, from £44/MWh to £73/MWh, and by 52% for floating offshore wind projects, from £116/ MWh to £176/MWh ahead of Allocation Round 6 (AR6) next year.
In the Allocation Round (AR6) next year, offshore wind will also be given a separate funding pot in recognition of the high number of projects ready to participate.
“Today we have started the process of our latest Contracts for Difference auction for renewables, opening in March next year. We recognise that there have been global challenges in this sector and our new annual auction allows us to reflect this,” Energy Security Secretary Claire Coutinho said.
RenewableUK welcomed the higher maximum price in auctions and its Chief Executive Dan McGrail said that the next clean power auction could attract record investment in offshore wind.
“With intense international competition for investment in renewables, we welcome the strong commitment to the sector shown by Government today, which demonstrates that the UK is intent on remaining a global leader in offshore wind, as well as innovative technologies like floating wind and tidal stream,” McGrail commented.
“There is the potential for the Government to attract a record level of private investment in offshore wind projects next year, with at least ten projects likely to be eligible, able to power 8.5 million homes each year and reduce the UK’s need for gas by 39%.”
The auction framework is a significant step forward to secure record amounts of private investments in offshore wind, according to RenewableUK.
“Although renewables haven’t been immune from the recent rises in financing and supply chain costs which all major infrastructure projects have faced, they remain the lowest cost means of generating new electricity,” McGrail said.
“Even at these new prices, there is still no cheaper way to meet the UK's rising electricity demand and increase our energy security.”
