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In this week’s Power Playbook: The UK’s Industrial Strategy promises to turn the UK into a global clean energy leader through catalytic public investment, breaking down barriers and building up investment certainty; while not perfect, there is reason to be cautiously optimistic.
The UK this week unveiled its Strategy, a policy roadmap for the country’s next decade, outlining how it will boost business investment and create skilled jobs across eight sectors, including clean energy.
Fundamental to the Strategy on clean energy is the position of the electricity network.
Earlier this week, when the Strategy was released, I reported on how the networks are seen as a ‘frontier sector’ for economic growth in the UK.
Under the Strategy, the UK government outlines different action points to cement the country’s position as a leader in clean energy.
Core to this, especially for the electricity networks sector, is by ensuring investment certainty, in part by working closely with NESO, Ofgem and industry to encourage greater sharing of data and early estimates of future demand for equipment and services.
Thus, will the supply chain get the confidence they need to invest in the UK.
Public investment, the strategy adds, will be catalysed, in part through a Public Finance Institutions offer and from the National Wealth Fund (NWF), which the government says will invest in the development of low-carbon power generation, flexibility and storage technologies and their supply chains.
This also isn’t to mention how the Strategy is looking to break down barriers to investment, a long list of measures, such as with the introduction of a Connections Accelerator Service, which they say will boost support for demand projects.
As I said, the plan caters for a lot.
So says Ed Miliband, UK secretary of State for Energy Security and Net Zero, in the plan:
“Our Clean Energy Superpower Mission means we are doubling down on Britain’s strengths and giving those industries the certainty they need to invest in the UK.
“This Sector Plan builds on that certainty, addressing specific barriers to investment and growth in priority areas. Over the coming months and years we will work in partnership with industry to deliver on these goals.”
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Cautious optimism?
This looks to be a double down indeed. But the question remains: will it be effective?
Well, an inbox flooded with commentary from industry experts leads me to believe so.
Take, for example, Tony O’Carroll, CEO of Conrad Energy. He said: “The new industrial plan, and the increased investment and attention it shows from the Government, is a much-needed boost for the sector.”
In particular, O’Caroll welcomes the promise of a new Connections Accelerator Service to streamline grid access for major investment plans. Although he questions what this will look like, “anything that reduces the horde of zombie projects currently delaying viable businesses from accessing energy is a step in the right direction.”
Or Schneider Electric’s Kelly Becker, who argues the plan will bring much-needed business confidence, particularly on reducing energy costs.
Said the company’s president for UK & Ireland, Belgium & Netherlands: “The Industrial Strategy is an important policy milestone, and it provides much-needed business clarity and confidence for investment. The Government’s focus on reducing energy costs is a welcome relief, as high energy bills are one of the biggest barriers to UK industrial growth.”
And Minesh Shah, fund manager of The Renewable Infrastructure Group (TRIG):
“Government’s commitment to make access to reliable, low carbon energy the centrepiece of its industrial strategy is welcome.
“For the UK to grow and compete on the world stage – the ultimate aim here – we need plentiful, low-carbon power and the right grid infrastructure to support it, and we need it now. This is key to attracting the job-creating, high-innovation sectors of tomorrow, as well as keeping legacy industries onshore and thriving.”
Erika Wilson, who is the president of trade association BEAMA, representing manufacturers of electrical products, said the plan marks a “significant and welcome development for our sector … marking the most substantial collaboration between government and industry to date.
“It paves the way for a more stable and attractive investment environment.”
Indeed, things look quite positive.
But more is needed
Despite how comprehensive the plan may be, this does not mean it’s a perfect setup.
For example, some people argue that it’s short-termism in its provisions to lower energy bills for businesses.
Take Phil Thompson, CEO of Balance Power, who says that although exemptions from environmental levies offer some immediate relief, “they don’t tackle the root of the energy cost problem – continued reliance on an overworked and over-constrained grid system.”
Rather, he adds, “the most effective long-term method to bring down costs, cut carbon emissions, and build energy resilience, is to encourage businesses to generate their own renewable energy onsite.”
On the other end, said Schneider Electric’s Becker: “…with the new British Industrial Competitiveness Scheme not being in place until 2027, businesses need support now.
“The technologies already exist to manage energy and reduce costs – increased uptake of these should be supported to help all businesses, not just those eligible under the new scheme.”
Additionally, for Caroline Bragg, CEO of heat networks and demand-side energy sector non-profit trade body ADE, although the strategy sets out positive steps, “details on funding remain vague, a concern heightened by the recent Spending Review.
“Only a small number of select businesses will qualify, sidelining thousands of businesses who desperately need support in the face of rising energy bills – particularly those businesses outside the Government’s industrial clusters.
“Ministers need to wake up, we cannot build a secure, affordable, low-carbon energy system while actively discouraging all the businesses that use it from investing in their future.”
Labour’s ambitious strategy for the UK is to be lauded, and with their recently announced plans to become a sustainable finance capital, it will be interesting to watch what projects receive the go-ahead and where investments will flow.
What do you think? Is the Strategy the gamechanger that the UK government and many industry players believe it to be? Will this investment certainty last?
Reach out and let me know your thoughts so that I can feature them in the Power Playbook.
Cheers,
Yusuf Latief
Content Producer
Smart Energy International
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