Government announces major reform of power network
Major plans to speed up connections and rapidly increase capacity on the electricity grid have been set out alongside £960 million investment in green industries.
The package of measures, which form part of a raft of 110 reforms and policies as part of the Autumn Statement, will support economic growth and further cement the UK as one of the best countries in the world to invest in renewables, bringing forward investment by building network infrastructure faster and speeding up grid connections.
Launched by the Chancellor and Energy Security Secretary, Government has published its response to Electricity Networks Commissioner, Nick Winser CBE, accepting his recommendations in all areas. These measures will halve the time it takes to build high-voltage power lines from 14 years to seven.
Building on this, the Connections Action Plan will cut the average delay time projects face to connect to the grid from five years to just six months. It will also see the end of the existing ‘first-come, first-served’ system, which had led to a long queue of projects to connect to the grid – holding back low-carbon investment.
Communities hosting new power infrastructure could benefit directly with lower electricity bills and money for projects in their local areas. They will have the power to decide how this is spent, for example on apprenticeships, energy efficiency measures, local parks or community energy generation. Properties closest to new transmission infrastructure will potentially receive up to £1,000 a year off electricity bills over 10 years.
The Government has also committed £960 million for the Green Industries Growth Accelerator, which will accelerate advanced manufacturing capacity in key net zero sectors, including offshore wind, networks, carbon capture, usage and storage, hydrogen and nuclear.
As demand for renewables grows, with international competition across supply chains, the Government is making sure the UK has the right conditions for further investment and growth. As a result of the UK’s global leadership in clean technologies, including the flagship Contracts for Difference scheme and the £20 billion recently committed to develop carbon capture, usage and storage, the UK has attracted £200 billion since 2010. A further £100 billion is expected by 2030, supporting up to 480,000 skilled jobs across the country.
The new package announced at the Autumn Statement is expected to bring forward £90 billion of investment over the next 10 years and will ensure the country’s infrastructure is fit for the green industries of the future.
Energy Security Secretary Claire Coutinho said:
“We have set out the most radical plans to update the grid since the 1950s – speeding up connections and rapidly increasing capacity.
“As we move away from unreliable imports to cheaper, home-grown energy, we’re boosting the grid so that it can meet our expanding electricity needs which are expected to have doubled by 2050. This will drive down bills while bringing forward £90 billion of investment over the next decade.
“We’ll also reward those living closest to new infrastructure with up to £1000 a year off their energy bills, while communities will get at least £200,000 to spend on local projects that matter the most to them.”
National Grid Chief Executive John Pettigrew, said:
“Networks are critical to connect cleaner, more affordable, home-grown energy to Britain’s homes and businesses, and we welcome the bold plans set out by government today.
“A spatial energy plan and accelerated planning consent will bring clarity, authority and urgency to what needs to be built and where, while new community benefit proposals will ensure local people remain at the heart of the energy transition.
“The Connections Action Plan will deliver fundamental reforms needed to enable us to plug clean energy projects in faster, and build on the progress already being made.
“The intent is clear and welcome; now these plans must be implemented at pace to capture the economic opportunity of the energy transition and keep Britain on target to achieve its climate goals.”
The Autumn Statement includes the following:
Speeding up grid connections
As set out by the Prime Minister earlier this year, the Government is taking action to ensure significant investment in new energy projects is supported by modern grid infrastructure – necessary to bring clean power to households and businesses while delivering emissions reduction targets.
The Connections Action Plan, published jointly with Ofgem, will overhaul the way projects access the electricity grid, releasing over 100GW of capacity from the grid connections queue. This is equivalent to around a quarter of the electricity needed to power our economy in 2050.
A ‘first-ready, first-connected’ approach will also be established, ensuring speculative and slow-moving projects are removed from the queue and supporting viable projects to connect when they are ready. Meanwhile, a triage service will be established to work closely and at pace with relevant investors, network companies and Ofgem to support accelerated connections for strategically-important demand customers, such as new industrial developments.
This follows Ofgem’s recent decision to give the Electricity System Operator new powers to terminate connection agreements of stalled projects that are holding others up in the transmission queue.
The Government has also accepted the programme of reform recommended by the Electricity Networks Commissioner to build new networks faster. This will support the delivery of up to 50GW of offshore wind power by 2030 and 24GW of new nuclear by 2050, as a major step towards decarbonising the UK economy.
This includes developing a Strategic Spatial Energy Plan, which will enable better decision-making on the location of energy system infrastructure to create a more efficient, lower cost system. The plan will give increased certainty for investors and industry, and give every community a say. It will be produced through close working between the Government and the ESO (and Future System Operator once established), in consultation with Ofgem, and act as a reference for the creation of a transmission network blueprint in the Centralised Strategic Network Plan.
Community benefits
As set out in the consultation response on Community Benefits for Transmission Infrastructure, benefits could be offered to communities hosting new transmission infrastructure.
These will be in the form of both electricity bill discounts – of up to £1,000 per year, or £80 a month – over 10 years for eligible properties; and money to spend on local community projects.
The Government will publish guidance next year, enabling residents to decide how to fund projects in their area, such as education initiatives for young people, local parks or community energy generation, electric vehicle charging points or energy efficiency measures.
The Government is also considering establishing a Community Benefits Register, to ensure developers comply with the guidance and provide inspiration to communities of projects for their local area.
Reforming the planning system
Meanwhile, National Policy Statements – the bedrock of planning major new energy projects in England and Wales – have been strengthened to make clear that the planning system must treat low carbon energy infrastructure as a Critical National Priority.
This underlines for everyone involved in planning decisions just how critical the need for energy infrastructure is. This works alongside a package of wider reform measures also being announced as a part of this package, to ensure the country can build the infrastructure it needs for energy security and net zero. This will facilitate investment to support growth, jobs, and emerging green industries, whilst respecting legislation to protect the environment.
This is an important step towards delivering net zero as fairly, efficiently and quickly as possible.
Backing green industries
By reducing delays in network build and speeding up grid connections, this package could bring forward investment by around £90 billion over the next 10 years.
The Government is committing £960 million over the next five years for the Green Industries Growth Accelerator. This will drive economic growth and bolster UK exports, while removing bottlenecks from the supply chain.
The Chancellor has also announced permanent Full Expensing: Invest for Less for those investing in IT equipment, plant, and machinery – an effective permanent tax cut of £11 billion a year. This will create the certainty that businesses, including renewable energy projects, need to confidently invest for less. A company can now permanently claim 100% capital allowances on qualifying main rate plant and machinery investments, meaning that for every pound invested its taxes are cut by up to 25p.
To further support new renewables investment, electricity generators who take a substantive decision to proceed with new projects after 22 November 2023 will have an exemption from the Electricity Generator Levy (EGL) on revenues from those projects.
National Grid ESO Executive Director, Fintan Slye, said:
“The ESO welcomes the strong package of reforms announced by the Chancellor, which will help ensure our energy system is fit for the future.
“Great Britain’s energy grids are the backbone of our economy and it’s imperative that we drive through urgent reforms to ensure grid access improves.
“These reforms both acknowledge the scale of energy production and network infrastructure required for future generations whilst ensuring communities hosting the infrastructure receive appropriate compensation.
“We look forward to continuing to work in lockstep with both Government, Ofgem and industry to drive these changes through, ensuring businesses can connect into the network when they are ready and that network is built in the right time, at the right place, with minimised impact on communities and the environment to facilitate these connections.”
Director General of the British Chamber of Commerce Shevaun Haviland, said:
“We have long called for the electricity grid to be upgraded to help companies transition to net zero. A recent BCC survey found more than a third (37%) of businesses were not getting what they needed from the grid, in terms of energy supply and connectivity. If we can greatly reduce grid connection times it will make a big difference.
“We also welcome the news of a growth accelerator for green industries. This will give businesses the confidence to invest in these key sectors where there are huge opportunities for UK Plc, which could support our economy for years to come.”
RenewableUK Chief Executive Dan McGrail, said:
“There’s a strong focus in Chancellor’s Autumn Statement on accelerating green industrial growth. His announcement on permanent full expensing will provide a much-needed degree of long-term certainty for investors in green technologies, helping to make the UK an attractive destination for investment in clean energy projects and manufacturing.
“This combined with the announcement of £960 million for a Green Industries Growth Accelerator to support clean energy manufacturing in the UK will help us to build up new supply chains in Britain at a time when international competition for investment in clean technology manufacturing has never been more intense.
“The decision to extend tax relief on freeports from five to ten years will help us to revitalise coastal communities by encouraging new investment in offshore wind manufacturing, including factories servicing innovative floating projects. Industry estimates that overall the offshore wind supply chain could boost the UK’s economy by £92bn by 2040.
“We also welcome the Government’s commitments to reform the planning system by offering local authorities financial incentives to make decisions faster, as well as their ambition to cut grid connection delays from several years to six months.
“We look forward to further key announcements such as the publication in March of more details on next year’s CfD auction which we hope will secure a record annual amount of new clean energy capacity.”
Chief Executive of the Energy Networks Association Lawrence Slade, said:
“Today’s announcements will hearten everyone working hard to enable net zero. We need to use every tool in the box to accelerate grid connections and ensure the country can deliver the critical infrastructure it needs as quickly as possible.
“It’s great to see the Government acting on the need for planning reform, including the publication of revised energy National Policy Statements. We also welcome the intent to ensure there are direct benefits for the communities hosting critical energy infrastructure and the steps set out in the Government’s Connections Action Plan.
“Steps taken by the electricity network operators, Ofgem and ESO (the system operator) have already helped to ensure nearly 50GW of capacity is being made available to customers in 2023. That’s almost the equivalent of the UK’s peak electricity demand. The steps announced today will help increase that even further over the coming months and years.
“We look forward to working with the Secretary of State and Minister for Nuclear and Networks to enable net zero, unlock grid capacity and boost UK investment.”
SSE Chief Executive Alistair Phillips-Davies, said:
“As one of the biggest investors in the UK, we welcome the Chancellor’s focus on encouraging business investment, speeding up the time it takes to build major projects and looking at how communities hosting clean energy infrastructure receive tangible benefits.
“We look forward to seeing further details of today’s announcements and working with communities and policymakers across the political spectrum to build the cleaner, cheaper and more secure energy system we all want to see.”
ScottishPower Chief Executive Keith Anderson, said:
“This is a much-needed boost to get Britain back on track as a nation that builds infrastructure the rest of the world can envy.
“We were pioneers with the first electricity grids almost a century ago and these electricity superhighways are critical to bettering the lives of the nation – securing more green and home-grown energy and enabling the shift to clean transport and heating.
“A relentless focus on people, planning and the UK pipeline is key to unlocking the massive economic growth of these investments. We welcome the Government’s plans to support communities who host this vital national infrastructure and raise awareness of the positive long-term impact on society.”
Microsoft Vice President External Affairs Hugh Milward, said:
“We urgently need to build the next generation of infrastructure that will see the UK economy grow and thrive. The measures announced today are precisely the kind of energy policies that will unlock a wave of additional domestic and international investment.”
GrantScape Chief Executive Matt Young, said:
“The Government Response to Community Benefits for Electricity Transmission Network Infrastructure was welcomed today. Community Benefit funding is a critical part of the overall implementation of these nationally important projects and a suitable mechanism to acknowledge the communities in close proximity.”
Image courtesy of UK Government.
