In a Spring Budget empty of fresh incentives for wind and solar projects, the UK Chancellor announced cash for nuclear power facilities and carbon capture, use, and storage (CCUS). In order to create “another plank of our green economy,” Chancellor Jeremy Hunt announced up to £20 billion in funding for early deployment of CCUS. According to the Spring Budget, a shortlist of projects that will receive the funds will “help meet the government’s climate commitments” later this month. Moreover, Hunt used the Budget to declare nuclear energy to be “environmentally sustainable” and to reaffirm that the technology will offer the same investment incentives as renewable energy.
Hunt announced the establishment of Great British Nuclear, a state-owned corporation that will support future nuclear construction in order to supply 25% of the nation’s electricity by 2050, underscoring the government’s nuclear aspirations. Although gigawatt-scale projects may be taken into consideration in the future, the company will first concentrate on co-funding tiny modular reactors. Hunt commended Grant Shapps, Secretary of State for the Department of Energy Security and Net Zeo, for his “energetic” advocacy of the plan. Renewable energy entrepreneurs would be disappointed by the Budget because they had hoped for changes to the Electricity Generator Levy.
The future of the offshore wind plants that won Contracts for Difference for 2022 was likewise unclear. This month, Orsted issued a warning that its ambitions to construct the 2.9GW Hornsea 3 offshore wind farm in the North Sea were in jeopardy unless the government provided tax benefits to offset rising costs. The Chancellor has nonetheless kept the door open for additional announcements in March. The government will outline more steps later this month to maintain energy security in the UK and meet our net zero goals, according to the documents, in addition to the measures in the Spring Budget. The head of wind at Ramboll UK, Phil Smyth-Tyrrell, expressed his desire for the government to have done more to address the risk of cost growth “dampening or destroying” offshore wind projects.
Additional tax advantages for investments in energy infrastructure are also urgently required, he continued. It’s crucial to remember that the government has additional “levers” than spending tax dollars and lowering tax rates. With insufficient predictability regarding the timing of offshore wind farm licensing by the government, predictability and risk are major issues in the offshore wind sector “Due to the ambiguous and unreliable licensing and CfD rounds, the industry is currently unable to predict when wind farm developments will take place. They must function flawlessly in order for the entire industry to grow as quickly as necessary to meet demands and aspirations throughout the supply chain.”
Energy storage company Zenob’s co-founder and director, James Basden, added: “We are disappointed with the clean energy package announced in today’s budget, which failed to acknowledge key obstacles faced by renewable energy developers or the crucial role energy storage plays in preserving energy security. The initiatives prioritize carbon capture and storage and nuclear, which are pricy and polluting technologies that won’t transform the energy system at the pace and scale required. Instead, they should be pushing the clean, green technologies that will get us to net zero. Nuclear energy is not considered a “sustainable investment” because of the enormous long-term costs and risks associated with decommissioning reactors and storing radioactive waste.
Emphasis should be put on affordable renewable energy sources and the energy storage technologies that support them since they balance out intermittent renewable generation and store clean energy during still and sunless periods. However, the actions taken do not go far enough to maintain our status as “global leaders in renewable energy” or to mitigate the consequences of the Inflation Reduction Act and EU Net Zero Industry Act, which are driving expertise and resources to more intensely competitive markets abroad. As the pace of the global green race quickens, we need to prioritize the technologies we know work well and remove the barriers to deployment, or we risk falling behind. “Today’s announcement was a landmark opportunity to win back the confidence of the nation, investors, and the world, but the government needs a more strategic plan.
