What's Happening in the UK Energy Market?

Read on for our summary of recent developments in the UK energy market.

Great British Energy:

On July 25th, DESNZ published a GB Energy Founding Statement, setting out the future structure and role of GB Energy to deliver on Labours clean power by 2030 promise. 

Interestingly, we’ve had recent clarification that GB Energy will be more than just an investment mechanism; it will own, manage and operate energy assets across the UK, with a focus on immature markets.

National Wealth Fund:

With over £7bn of funding available, many energy projects ranging from hydrogen to carbon capture can look to benefit from the fund. The key metric for the NWF is if it can attract at least £3 of private finance for every £1 of public finance. Taking learnings from any work with the UK Infrastructure Bank and their processes will be a useful start to anticipate how some of the funding can be accessed. 

Planning Frameworks:

Labour has initiated plans to reform the National Planning Policy Framework as it attempts to solve the age-old challenge - delivering new infrastructure in the right areas at pace. 

These reforms are primarily designed to boost house building but will also include reclassification of some green belt land to ‘grey belt’ land which can be expected to be used for clean energy projects. 

Regional Energy Strategic Plans:

A new and highly anticipated building block for enabling a ‘whole system approach’ that the National Energy System Operator will take responsibility for. With a hub and spoke model, there are 11 proposed regions, each with a strategic board. If you operate an existing plant or have planned generation in these regions, it will be essential to engage with these new boards.

National Energy System Operator:

Yet to be formally established, the energy industry is awaiting the reform of the Electricity System Operator as it is brought into public control. Initially due to launch this summer, the NESO will be pivotal to the coordination and planning of Great Britain's energy system, along with enabling the various fuels we use within the system.

Energy Recovery Facilities:

In the run up to the General Election, the Conservatives pledged to ban new permits for Energy Recovery Facilities and cancel recently signed permits, rocking the market. Labour on the other hand, never matched this pledge and have since not referenced reinstating the ban.

Mission Control: 

Chris Stark was appointed as the Head of ‘Mission Control’ for clean power 2030. As the UK was set to meet Carbon Budget 4, the new clean power target will put additional pressure on meeting Carbon Budget 5. The additional policy and industry experts will help support and oversee the development and delivery of Labour’s plans to transition the power system within this decade.

Whether you’re a generator, supplier, market facilitator or other key sector actor, closely watching their publications will keep you ahead.

Contracts for Difference:

Within their first week in power, Labour lifted the de facto ban for building onshore wind projects in England. This change will be key to Labour meeting its goal of becoming a ‘clean energy superpower’ in its efforts to double onshore wind, triple solar power and quadruple offshore wind by 2030. In support of this, DESNZ announced an increased budget of over 50% compared to the previous budget.

Grid Connections:

Transmission and Distribution network reform will be essential to delivering the 2030 clean power target and enabling the transition to renewable based capacity. Earlier this year we began to see the First Ready, First Connected approach (TMO4+) be implemented and has so far been positively received through the rest of this year.

What can we expect next?

The Autumn budget will be a key focus for us. With strained public finances, it’s not clear how Labour will prioritise support for new technologies balanced against the need to keep bills low for consumers. 

COP29 is also just around the corner. It will be a focal point for Labour to demonstrate their leadership for a low carbon economy on the international stage, meaning we can expect multiple ambitious announcements for domestic policy as a showcase.

Not to be forgotten, REMA. The Review of Electricity Market Arrangements was a hot topic earlier this year, with recent announcements of increasing energy bills, a number of industry stakeholders are calling for regional energy pricing…we will keep you updated on this. Despite Labour removing themselves from the debate, as consultation responses are reviewed by officials in DESNZ, we anticipate officials will soon start to draw conclusions on core arrangements.