30 March 2023
If you are covering Powering up Britain, the plan setting out how the government will enhance the UK’s energy security, please find comment below from Tom Gilbey, equity research analyst at Quilter Cheviot:
“Much of the government’s energy security strategy has been known for many months and helps to contextualise the recent announcements from the budget. It is pleasing that it seems to be taking the transition to net zero seriously, and there is a desire to put fossil fuels back in the ground once a transition is achieved.
“The policy paper includes a push to accelerate investment in the grid, halving the development time for transmission network projects, with a plan to follow later this year. We view the Grid as a key energy transition enabler, and this is one of the reasons we own National Grid.
“The government is also pledging to cut the time taken to build renewable electricity plants by ‘creating a more conducive planning environment’. We view this as a necessary move as the lag for getting approval has been a sticking point in the roll out.
“Interestingly, there is no mention of windfall taxes. Renewable electricity generators have been arguing vehemently against the windfall tax on their profits. Ideally if we are to achieve net zero by 2050, we need to remove the barriers to entry and promote investment in what is still a nascent industry. It is positive to see the government put emphasis on the need for renewables, and especially newer technologies such as hydrogen and carbon capture, usage and storage.
“The government has stressed the need for private investment, and certainly looking at the amount set aside for green hydrogen projects more is likely to be needed than £240m. Speeding up the planning process for these projects is helpful, but the government could potentially do more to remove some of the barriers that could really help this industry take off.
“For companies operating in electricity generation, the fact there is a strategy is a good thing and should hopefully allow them to properly plan they investment and start executing on some of these projects.”
