Policy changes in the wind for green energy

Charles Hardcastle, Head of Energy & Marine, Carter Jonas, comments on the new government’s ambitious plans for renewable energy.

Onshore wind

Labour has acknowledged that one of the blocks to onshore wind in England, unlike its neighbours across the borders in Scotland and Wales, remains the planning system.

Through the revised NPPF, published in late July, Labour proposes to overturn the current onshore wind ban.

The policy change should bring this cheap form of renewable energy back to England. Labour’s aim of “doubling” onshore wind capacity by 2030 opens up an exciting number of opportunities which have previously been blocked.

While we expect this policy change to release large wind developments in certain areas of the country, this also presents opportunities for small to medium scale developments associated with high energy off-takers.

GB Energy

Labour has set up GB Energy to co-develop projects, especially from novel technologies such as wave, and procure the required electrical infrastructure. In both cases it will be interesting to see how much of a splash they make in the market or if GB Energy stays as a fringe player.

Approximately £8 billion is allocated for the future Scotland-based company, which is in addition to the circa £22 billion allocated to the also state-owned UK Infrastructure Bank located in Leeds.

Net zero electricity grid by 2030

This ambitious policy change will further galvanise the renewable energy industry and hopefully point to additional grid reform and investment to speed up connections, which is still a significant blocker to meeting this target.

Tax

Labour intends to extend the Energy Generator Levy until the end of the next parliament and increase the tax by 3%. This will continue to capture any super profits made by generators in this time but should not impact financial viability modelling.

Nuclear

Labour aims to invest in existing and new nuclear generation, with the aim to provide greener baseload generation and improve energy resilience. They are looking to extend the service life of existing plants, and build new ones like Sizewell C, in addition, there is interest in Small Modular Reactors with the likes of Rolls Royce investing in such technologies. France is famous for its nuclear generation capabilities, and it will be interesting to see if we will adopt a similar strategy.

Hydrogen

Labour pledges to invest £500 million into green hydrogen production, given hydrogen’s relative infancy as an energy source it will be interesting to see how they effectively work with the private sector such as JCB who have already invested some £100 million into the technology. Hydrogen has the potential to provide a new route to the market for renewable energy generation where the electricity grid is otherwise constrained.

Funding opportunities

Unlike the current UK Infrastructure Bank, Great British Energy will concentrate exclusively on green energy projects, delivering more specialised support and resources to this sector. The Labour government plans to deploy significant public investment alongside grants, subsidies, and green bonds to catalyse private investment.

Despite the robust private capital already engaged in the renewable energy sector, public funding remains vital to address funding gaps, reduce investment risks, and spur innovation. Government-backed initiatives play a crucial role in de-risking investments for private entities, fostering more widespread and equitable growth, and ensuring alignment with national climate objectives.

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