Legal development

UK government outlines energy security plans

Insight Hero Image
    The UK government has published its ‘British Energy Security Strategy’ last Thursday, which aims to secure long-term, clean and affordable energy for the country. The strategy, which comes in the wake of the recent substantial rise in electricity and gas bills for UK households, as well as fears about energy security exacerbated by the war in Ukraine, is intended to ensure a greater proportion of the country’s needs are met by low carbon domestic resources.

    The highlights from the document include:

    • Building up to eight new nuclear reactors, on existing sites
    • Speeding up planning laws for new offshore windfarms
    • Boosting hydrogen production
    • Potentially reforming the planning rules for installing solar panels on the roofs of buildings, including homes and government offices
    • Launching a new licensing round for offshore oil and gas projects. The government says UK gas has a carbon footprint well under half that of most imported gas

    When it comes to nuclear power, a new body – Great British Nuclear – will be set up, tasked with helping projects through the development process and securing a pipeline of new-builds. In addition, the government says it will act with other countries to accelerate work on advanced nuclear technologies such as Small or Advanced Modular Reactors. It hopes nuclear power can provide up to 24 gigawatts (GW) of electricity by 2050 – three times the current level.

    The government also says it will consider the role UK public financing can play in supporting the new projects. Depending on the pipeline, it says the new programme could see the UK improving its track record, delivering the equivalent of one reactor a year, rather than one a decade.

    The strategy for offshore wind includes an ambition to deliver up to 50GW of power by 2030, including up to 5GW from floating wind farms. The government wants to cut the timeframe it takes to develop offshore wind farms in half by – among other measures - reducing consent time, reviewing environmental regulations, and establishing a fast-track consenting route for priority cases where quality standards are met. It also says it will offer clear investable signals through annual auctions - with the next round a year earlier in March 2023 - and consult on changes to the 2024 Contracts for Difference (CfD) auction, Allocation Round 6, that incentivise renewables to locate and operate in a way that minimises overall system costs. Meanwhile when it comes to onshore wind, in England there will be no wholesale changes to current planning regulations; however, the government will consult this year on developing a limited number of local partnerships.

    In terms of ground-based solar power, the government will consult on amending planning rules to strengthen policy in favour of development on non-protected land. It also wants to encourage large scale projects to be built on previously-developed, or lower-value land, and aims to support developments that are co-located with other activities, such as agriculture, onshore wind, or storage. For rooftop panels, the government says it will simplify planning processes with a consultation on permitted development rights, and will also consider the best way to make use of public sector roofs.

    When it comes to hydrogen power, the government is aiming for up to 10GW of low carbon production capacity by 2030. It is planning to run annual allocation rounds for electrolytic hydrogen, moving to price-competitive allocation by 2025 as soon as legislation and market conditions allow. It also wants to design new business models for hydrogen transport and storage infrastructure, and set up a hydrogen certification scheme by 2025, both to support exports and to ensure imported hydrogen meets the correct standards.

    On network infrastructure and storage, the government says it intends to halve the time it takes to get projects built. It will publish a strategic framework this year along with Ofgem about how networks will deliver net-zero, and appoint an Electricity Networks Commissioner to advise on policies and regulatory changes.

    Turning away from renewables, the government also announced another licensing round for oil and gas production in the autumn. It is establishing dedicated support structures to facilitate rapid development of projects, as well supporting industry investment in electrifying offshore production to reduce emissions. It also says it remains open minded on onshore development, such as shale gas.

    The government’s strategy paper outlined other plans, such as improving energy efficiency and boosting the market for heat pumps. The strategy as a whole raises a number of issues for financial institutions and corporates such as how the funding for the new projects will be secured, how the planning process will unfold, the impact on competition law, and whether regulations will need to change in order for the government to meet its targets. For more information on the strategy, please speak to your Ashurst energy contact.

    The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
    Readers should take legal advice before applying it to specific issues or transactions.


    Stay ahead with our business insights, updates and podcasts

    Sign-up to select your areas of interest