Clarity, consistency and delivery is key for UK policymakers
Tom Williams, Partner and Head of Energy and Infrastructure at Downing, Investment Manager of DORE plc, outlines the monumental task ahead for the newly elected Labour government – but also the opportunity that comes with it.
The Labour Party’s victory in the general election marks a historic moment for both the UK and its energy industry. Sir Keir Starmer and his Party have pledged to invest in green infrastructure, create hundreds of thousands of jobs in the energy sector and bring Britain clean power by 2030.
But, as quickly as promises are made, they can be broken. The time for manifesto writing and commitment making has passed – now, it is time for action.
The UK needs stability
A thoughtful and stable policy environment is essential for the UK to maximise its renewable energy generation. For too long there has been flip-flopping from one unworkable policy to another, with no long-term planning or any coherent energy strategy to speak of.
From the Labour government, who have made a great start, we would like to see clarity, consistency and delivery of policies that prioritise what is the challenge of our lifetime. Supporting the transition to Net Zero is an opportunity for growth, job creation and will help to reduce household bills, and we should embrace it wholeheartedly.
The government will also need to show its support for the private sector through investment incentives that will attract much-needed capital for the renewable projects necessary to enable us to take charge of our energy security.
Although we will never be truly independent of the countries around us as we increasingly connect our energy system to that of Continental Europe and the Nordics, it is important to produce as much energy as possible from within our borders. Renewables have a huge role to play in this task, and we at Downing are playing our part with more than 6GW of projects in development.
Rachel Reeves is making an immediate difference
Ten months after Rishi Sunak’s U-turn on the country’s Net Zero plans, which included delaying the ban on the sale of new petrol and diesel cars from 2030 to 2035, and his commitment to new offshore drilling projects such as Rosebank, Chancellor Rachel Reeves is putting the UK back on track with Net Zero being an important goal. Her plans to lift the questionable moratorium on onshore wind power and streamline planning regulations for energy projects are hugely positive for the green economy. Ed Milliband has also followed up with immediate action on unblocking the planning delays for three large solar projects, which will make a significant dent on the Net Zero targets with more to come.
The Labour government’s objective to allocate a portion of the £7.3bn national wealth fund to investment in renewable energy is equally welcome news to the industry. Key, however, will be its ability to attract private capital.
Governments worldwide are competing to create a political and regulatory environment that attracts private investment in renewable energy, and the deep pockets of the global investment community are responding. Although billions are flowing into projects globally, trillions are required. Unlike the previous government, Labour must continue in the positive way they have started, by putting policy over politics for the sake of attracting this capital and harnessing our industry’s ambition to achieve Net Zero.
How renewable energy investment trusts can support Labour’s 2030 clean energy target
Labour’s target is ambitious, as it has to be. To succeed, the government will need to tackle the gating issues: grid capacity and planning. Without clear guidance given to local planning authorities, we will continue with the triumph of nimbyism over national interest.
Grid infrastructure upgrades will have to be executed at pace and grid connections brought forward – it will be very hard to mobilise the billions needed to transform our energy production by 2030 if you cannot connect the projects until 2040.
Over the last decade, renewable energy investment trusts have raised and deployed billions of pounds into renewable energy. The government should think of them as very effective funders of its energy policy, provided it keeps its end of the bargain: clear, consistent policy and backing up words with action.
Great British Energy offers opportunity
Labour’s plans to make the UK a clean energy superpower through Great British Energy is an overwhelmingly positive move. Labour aims to double onshore wind, triple solar power and quadruple offshore wind by 2030. Increasing renewable energy generation at this scale requires vast amounts of capital and investment trusts have a huge role to play in providing the capital to fuel this transition.
While we may not need to treat decarbonisation like “the vaccine challenge”, Sir Patrick Vallance is right that the UK should be the innovators and the implementers, helping ourselves and exporting our solutions, rather than buying them in – truly making a difference and creating a greener global landscape.
If you’d like to discuss any of the topics raised throughout the article, please get in touch.
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