The Labour Government's plans to establish Great British Energy and focus on making the UK a clean energy superpower are welcome announcements. While some of the policy details are still unclear and will evolve over the coming months, the time to take control of this opportunity and make meaningful progress to net zero is now.
The emphasis is on doing more, faster -- being zero carbon by 2030 -- and in a more integrated manner. Achieving this will need greater involvement by the public sector and working more collaboratively with the private sector across the energy landscape.
The UK’s path to zero carbon - what’s next?
Accelerating the journey to a low carbon future will require a ‘whole system’ approach to rewiring, repowering and reskilling the UK - reshaping the power generation mix, replacing and upgrading the UK energy transmission and distribution infrastructure, and bridging the gap to get the skills and supply chain to deliver large infrastructure upgrades at scale. There are five key areas of policy which are likely to have the most immediate impact on delivering that ambition.
1. Removing blockers: To meet the accelerated 2030 targets and demonstrate tangible results, the focus needs to be on increasing the pace of the installation of new low carbon infrastructure - generation as well as connecting infrastructure. This means tackling head on previous blockers across the project lifecycle such as planning, financing and deliverability of a once in a generation scale of investment, all against a backdrop of constant change through geopolitics and technology-driven shifts in demand.
2. Taking a ‘whole system’ view: The move towards more centralised energy planning will continue and the National Energy System Operator (NESO) will be fundamental to providing a whole energy system view. The need to coordinate network, infrastructure, and energy requirements on a whole system basis to support both national and local priorities has prompted this move towards a more centrally planned energy system. This whole system view is now more important than ever given the accelerated timescales and the need to make tough decisions and prioritise focus and investments.
3. Evolving regulation: The role of regulation needs to evolve from setting a cost framework to enabling investment at pace, and allowing for greater flexibility and innovation in delivery. This includes developing new regulatory frameworks that will need to be in place in the medium-term to govern emerging components of the electricity system, such as heat networks, and transport/storage networks for carbon capture utilisation and storage (CCUS), as well as how a future role for hydrogen can be appropriately supported through the regulatory regime.
4. Attracting capital: Funding remains complex and will require capital from a multitude of different sources. There is a gap between what is needed and what the market is currently providing, so there is a need to bridge this gap and generate new ideas for how private capital investors, big companies and Government can collaborate together. The Government is aiming to use public institutions to crowd in private sector investment, supported by greater policy stability and direct engagement with major investors in new models of working with Government. The success of GB Energy and the National Wealth Fund, for example, will be measured by the amount of additional private capital they are able to mobilise, not just the amount of public money they deploy.
5. Building a resilient supply chain: Planning is necessary, but not sufficient. We need to make sure plans are also deliverable, which means tackling more systemic issues like supply chain constraints and skills shortages as highlighted in PwC's Framework for Growth report. It's imperative that solutions are regional as well as national. The supply chain, particularly services and access to raw materials, needs to build capacity and capabilities, where they are needed regionally, to support the delivery of the Government’s accelerated plan. Developing and protecting critical UK capabilities and activating international partnerships to source the required materials, while managing international geopolitics to compete on a global stage, will be important as all countries look to secure supply and meet ambitious net zero targets.
The energy transition can’t be tackled in a piecemeal or siloed fashion. The UK must now take this opportunity to make meaningful progress towards a sustainable decarbonised future with a whole system approach. This road to net zero requires prioritising key initiatives and making bold choices to turn ambition into action.
Co-written by Vicky Parker and Matthew Alabaster from PwC United Kingdom. Related: See additional PwC guest blogs here.
