2024 General Election: a brave new world or more of the same?

Rinnai’s Chris Goggin reviews the NetZero policy statements espoused by both of the main political parties this side of the General Election, considers the viability of these plans, and gives a summary of the key issues regarding investment, infrastructure and cost evaluated against the trajectory of the international energy market and realistic domestic requirements.

A potential change of government is thought to be likely after the forthcoming General Election. If a change of direction in UK governance is introduced, a redrafting of every major UK policy will take place. One area of legislation that remains an important pillar of political discussion is the question of energy – its supply, its price, its security and its impact on NetZero.

To provide a brief overview: the current opposition believes that renewable generation should be expanded far beyond the present government’s ambitions. Nuclear expansion will also be pursued whilst all North Sea drilling contracts will be honoured. However, the opposition’s long-term plan is to shelve oil and gas usage in favour of carbon reducing alternative energies.

A more detailed look reveals discrepancies between the opposition and the current government’s approach to all critical areas of UK energy. However, additional renewable energy integration into the UK grid is reliant upon electrical grid upgrades that assist in renewable grid connections. Both political parties have separate plans for UK electric grid upgrading, visited later in this article.

Solar power will be tripled from 15.6 GW to 50 GW of installed capacity, whilst onshore wind will be more than doubled from 15 GW to 35 GW. Green hydrogen targets will also be doubled from 5 GW to 10 GW. Existing nuclear projects will also be completed alongside the completion of smaller nuclear projects such as the construction of small modular reactors.  Clean offshore wind production will be quadrupled to 55GW by 2030.

Although the opposition has pledged to increase investment into hydrogen and CCUS (Carbon Capture Usage & Storage) it has not been highlighted how this strategy would best result in a mutually beneficial outcome. For instance, the opposition has not stated whether they will purchase or invest in privately owned hydrogen projects or construct their own hydrogen projects.

A cornerstone of the opposition’s energy policy will be the creation of GB Energy, which has been recently described in The Guardian as: “a state-owned investment vehicle and company working alongside and often in partnership with the existing private sector suppliers. The plan is for it to be largely invisible to households, not offering electricity directly to consumers but financing and helping to build low-carbon infrastructure, from windfarms to – potentially – nuclear reactors.”

GB Energy will have access to £8.3 billion of capital to assist in the completion of strategic objectives. £3.3 billion will be directed towards the construction of localized smaller power projects whilst £5 billion will be invested into larger projects and supply chains. This money will be raised through the taxing of North Sea fossil fuel companies.

Both UK political parties believe that decarbonising the national electricity grid remains a priority that will enable cheaper customer costs and increase clean energy usage across the entire UK. However, they are yet to agree on an appropriate pathway that secures beneficial economic and societal benefits.

The opposition believe decarbonising the UK energy grid by 2030 can be achieved through capacitating £116 billion of investment, whilst the current government’s plan is to extend the 2030 timeline to 2035 and absorb £104 billion of additional subsidy. Time and finance are central issues to both strategies. Both approaches have been labelled as viable and non-realistic, according to which political party an individual subscribes to.

A financial breakdown report was commissioned by Policy Exchange, a research institute that aims to influence domestic and international policy. The report was completed by an independent energy market analytics company – Aurora Energy Research.

The current opposition will require huge amounts of capital investment to achieve their aim of decarbonising. Aurora has calculated that £15.6 billion a year until 2030 is required (total £93.5 billion) and a further £4.4 billion a year from 2031-2035 (£22.5 billion) equating to a total of £116 billion over the next 11 years.

In contrast, current government plans to decarbonise the UK’s power grid by 2035 will require £8.2 billion a year of additional investment until 2030 – a total of £49.3 billon. A further £11.1 billion a year of additional investment from 2031-2035 adds up to £55.3 billion. The total accumulative investment over 11 years will amount to £104.6 billion over the next 11 years.

The approach undertaken by the current opposition when compared to the present Govt party focuses on the expanding of renewables, hydrogen and nuclear in a shorter span of time at increased financial expense.

We need to keep in mind also that future energy policy by both UK political parties is dependent on wider international energy market conditions and geopolitical influences. There is no doubt that there are no easy or quick answers to the question of providing energy to both commercial and domestic markets.

Rinnai follows all news and developments connected to national and international energy policy, investment and legislation, and will continue to provide updated information and data-driven knowledge to all UK customers on events that could potentially affect cost and energy options.

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