Powering up Britain – Net Zero Growth Plan
On 30 March 2023 the UK Government released their latest roadmap for delivering Net Zero in England & Wales by 2050. This builds on the objectives set out in the Energy White Paper, Net Zero Strategy and Energy Security Strategy whilst recognising the direction of the current UK Government and addressing political and economic factors.
The newly formed Department for Energy Security and Net Zero (DESNZ) has published this 'blueprint' for the future of energy in the UK.
The war in Ukraine has highlighted the UK's over-reliance on imported oil and gas, with the average wholesale gas and electricity prices increasing exponentially and contributing to the cost of living crisis. As a response, the UK Government will be working with the new Energy Efficiency Taskforce to further enhance Britain's energy security by developing and implementing credible and reliable energy sources while at the same time accelerating the UK's progress towards the 2050 Net Zero target.
The strategy outlines a number of key commitments, investments and incentives, putting an emphasis on harnessing new technology and innovation as part of the energy transition.
Key announcements on renewable energy generation, decarbonising heat and energy efficiency are:
The Government recognises the key role of solar, offshore wind and hydrogen in decarbonising the power system by 2035, and are committed to:
- Increase solar power capacity to 70GW by 2035 by establishing a specialised taskforce and a solar roadmap to incentivise the additional deployment of ground and rooftop solar.
- Reach 50GW of offshore wind capacity by 2030 using floating turbines which can be deployed in deeper waters capitalising on greater wind speeds. To this effect, the £160 million Floating Offshore Wind Manufacturing Investment Scheme (FLOWMIS) is to be launched which aims to boost investor confidence in this emerging sector.
- Advance the delivery of new nuclear projects via the funded Great British Nuclear (GBN), starting with a competitive process for Small Modular Reactor technologies in April 2023. A £120 million Future Nuclear Enabling Fund has also been announced demonstrating a clear intention to progress new nuclear power.
- Deploy Hydrogen as a credible power source, with further consultations and a hydrogen production delivery roadmap expected later this year. Announcements of the winning projects from the £240 million Net Zero Hydrogen Funding and the shortlist of projects moving forward to due diligence in the first electrolytic hydrogen allocation round are also expected soon, with plans for a second electrolytic allocation round set to be announced shortly.
Carbon Capture and Storage
The strategy maintains the Government's clean growth programme and implementation of Carbon Capture, Usage and Storage (CCUS) infrastructure. CCUS is expected to be deployed in at least two industrial carbon clusters (in the Northeast and Northwest) in the mid 2020's and in four other clusters by 2030. This is in addition to the announcement from the 2023 Spring Budget, which committed £20 billion to the development of CCUS.
Measures intended to accelerate decarbonisation of heating were reiterated, including:
- A £220 million Heat Network Transformation Programme which will run from 2025 to 2027, alongside the Green Heat Network Fund and the Heat Network Efficiency Scheme which are extended to 2028, fuelling the Government's plans to decarbonise UK heat.
- The £30 million Heat Pump Investment Accelerator seeks to boost UK heat pump manufacturing and to develop the supply chains. To further incentivise manufacturers, a Clean Heat Market Mechanism is also proposed for launch in 2024.
- The Boiler Upgrade Scheme is to be extended to 2028 and will continue grant funding to cover part of the cost of replacing a conventional boiler system with heat pumps or biomass boilers, incentivising households to transition from conventional fossil fuel heating systems.
- To meet the objective of 600,000 heat pumps installed per year by 2028, the Government plans to issue a strategy to address gas/electricity price rebalancing by 2024 (to rebalance policy costs away from electricity prices and towards fossil fuels), with changes in relative prices to be expected by the end of 2024.
There is significant focus on energy efficiency upgrades to existing homes and buildings with emphasis on supporting the UK's least efficient homes, including:
- The Energy Company Obligation Scheme – the Great British Insulation Scheme looks to deliver £1 billion of additional investment by March 2026 in energy efficiency upgrades which will target around 300,000 of the UK's least efficient homes and a general eligibility group. Legislation is expected in Summer 2023 which will offer a range of subsidised retrofit measures such as loft and cavity wall insulations to help retain heat, in a way of combating energy usage and subsequent inflating bills.
- Wave 2.1 of the Social Housing Decarbonisation Fund continues to allocate up to £800 million of funding to support housing associations, registered providers and local authorities with the installation of energy performance and retrofit measures in affordable homes throughout England.
- With applications for Phase 3 set to open in early 2024, the Industrial Energy Transformation Fund (IETF) aimed at cutting businesses' energy use and carbon emissions through investments in energy efficiency measures and low carbon technology is to be extended.
- To increase its support to small businesses on improving non-domestic energy efficiency, the Government is planning to launch a new digital energy advice service to provide impartial and trusted advice.
The full publication can be accessed here