Early in April the British government published its Energy Security Strategy - a package of ambitious measures to accelerate the plan for a more secure, clean and affordable energy system that is getting more independent from Russian Gas supplies.
The British Energy Security Strategy builds on the Prime Minister’s Ten Point Plan for a Green Industrial Revolution, and, together with the Net Zero Strategy, is driving an unprecedented £100 billion of private sector investment into a secure, stable and prosperous future in the UK and Europe.
Before we look into the relevant technologies let me say two things:
1. It matters – now more than ever
- The crisis in Ukraine and our exposure to high global gas prices has highlighted the importance of our plan for a strong home-grown low-carbon economy to strengthen our energy security into the future – this is true for the UK and across Europe.
- The British Energy Security Strategy sets out how Great Britain will accelerate the deployment of wind, new nuclear, solar and hydrogen, whilst supporting the production of domestic oil and gas in the nearer term – which could see 95% of electricity by 2030 being low carbon.
2. UK-Europe partnership has a key role to play in delivery
- As the UK we stand ready to drive forward our work with our European partners for more efficient trading across our electricity interconnectors, lowering costs for UK and EU consumers.
- This strategy supports Net Zero delivery and creates great opportunities for European business.
So let's investigate the key announcements in some more detail:
Nuclear
- The strategy will see a significant acceleration of nuclear, increasing our plans for deployment of civil nuclear to up to 24GW by 2050 – approximately three times more than today and representing up to 25% of our projected energy demand.
- A new government body, Great British Nuclear, will be set up immediately to bring forward new projects, backed by substantial funding.
- Using small, modular reactors as a key part of the pipeline and we will launch the £120 million Future Nuclear Enabling Fund this month.
Offshore wind
- Already set to quadruple to 40GW by 2030, we want to increase the pace of offshore wind deployment by 25% as we expect to hit 50GW by the end of the decade with 5GW from floating offshore wind in deeper seas.
- To speed-up planning the “Offshore Wind Acceleration Task Force” is to cut the approval times for new offshore wind farms from 4 years to 1 year. An overall streamlining will radically reduce the time it takes for new projects to reach construction stages while improving the environment.
- To maintain deployment levels, CfD round 6 is set to incentivise renewables to locate and operate in a way that minimises overall system costs.
Hydrogen
- We aim to double the hydrogen target set out in the ‘Ten Point Plan for a Green Industrial Revolution’ up to 10GW by 2030, with the intention that at least half of this will be from "green” hydrogen to help store excess renewable power and use it when needed, lowering costs for consumers.
- To provide long-term signals we aim to run annual allocation rounds for electrolytic hydrogen, moving to price competitive allocation by 2025 as soon as legislation and market conditions allow, so that up to 1GW of electrolytic hydrogen is in construction or operational by 2025.
- We will level the playing field by setting up a hydrogen certification scheme by 2025, to demonstrate high-grade British hydrogen for export and ensure any imported hydrogen meets the same high standards that UK companies expect.
Onshore wind
- To accelerate the deployment of onshore wind we will be consulting and developing partnerships with a limited number of supportive communities who wish to host new onshore wind infrastructure in return for guaranteed lower energy bills.
Solar
- We will look to increase the UK’s current 14GW of solar capacity which could grow up to 5 times by 2035.
Oil and gas
- To help ensure our energy resilience as we transition, we will be making use of our reserves and ensure a future for the North Sea.
- A licensing round for new North Sea oil and gas projects is planned to launch in Autumn, with a new taskforce providing bespoke support to new developments – recognising the importance of these fuels to the transition and to our energy security, and that producing gas in the UK has a lower carbon footprint than imported from abroad.
- We are examining our infrastructure to ensure gas flows efficiently between the UK, Europe and the global market to support European supply. For example, through our interconnectors and LNG terminals and to promote gas infrastructure to be hydrogen-ready. This is to ensure that the UK will provide a key EU entry point for non-Russian supplies of gas in the nearer term. This goes to show what I mentioned before: UK-Europe partnership has a key role to play in delivery.
Networks, storage and flexibility
- Accelerating our domestic supply of clean and affordable electricity also requires accelerating the connecting network infrastructure to support it. We will do this by offering clear signals on future need and increasing flexibility for both generators and users.
- The strategy sets out a range of measures to achieve this, including setting out a blueprint for the whole system by the end of 2022 and encouraging flexibility by developing appropriate policy to enable investment.
Heat and energy efficiency
- A Heat Pump Investment Accelerator Competition in 2022 has been launched worth up to £30 million. This will offer 10% support for projects that offer value for money and prove they need the funding. Awards are to be made by Christmas. Winners will need to commit some investment before April 2023.
- To support energy efficiency technology, we will double funding for innovative green finance products - this is a previously announced scheme, but the budget has increased from £10m to £20m.
Bosch, EDF, Equinor and Siemens have all shared their positive feedback on aspects of the strategy:
We welcome the Government’s announcement of a heat pump manufacturing accelerator competition. Heat pumps are a growing part of our UK domestic heating business and will play a crucial role in reducing emissions from new build, modern and larger dwellings. We look forward to working with the Government to ensure the competition creates highly skilled jobs and helps to deliver on the Government's net zero ambitions.
Building more new nuclear will reduce Britain’s dependence on overseas gas and keep energy prices stable, creating thousands of jobs while we’re doing it. At Hinkley Point C we’re already building British nuclear, with 3600 British businesses and 22,000 people making it happen, including over 800 apprentices.
Equinor welcomes the Prime Minister’s Energy Security Strategy. The strategy gives us confidence that the UK will continue to provide opportunities to invest in energy and we will be able to grow our businesses in the UK, from offshore wind, to hydrogen and CCUS, and oil and gas. These investments will not only support the UK’s energy transition to Net Zero, but will help provide energy security in the UK and across Europe.
The UK needs a mixed and dynamic energy policy to ensure secure and affordable energy and manage the transition to Net Zero. While the Strategy provides greater certainty about the UK’s major generating priorities which will help to unlock investment and innovation, there remains much to do to drive up energy efficiency and leverage the benefits of local energy systems.
To conclude: Like the Net Zero Strategy and the Ten Point Plan, the Energy Security Strategy incentivises markets for the long-term and signals to industries to invest in lower carbon processes and cost-effective solutions at the pace required.
My team and I look forward to continuing working with you to deliver the economic transition and support sectors throughout the full funding cycle, from emerging technologies through to infrastructure and project finance.
So please keep sharing your feedback. If you are a Europe-based company and would like to hear more about how to get involved with any of these great opportunities, please contact Christian.Marienberg@fcdo.gov.uk or me. You can also explore significant sustainable investment opportunities available across the whole of the UK here.