It has been a busy and impressive start for the new Labour Government in the UK. Within four weeks of the July 4th election, the Government announced a series of significant reforms and initiatives for the domestic wind industry.
Unlocking onshore wind in England
The first major announcement was a lift on the de-facto ban on onshore wind farms in England. This ban arose from footnotes to the National Planning Policy Framework (NPPF). These required strong proof that there was no local opposition to onshore wind projects. Given that there is nearly always some local resistance to any proposed new infrastructure, this made onshore wind development effectively impossible.
Lifting this ban was a necessary and obvious step for a government keen to show its green credentials. Shortly afterwards, Government announced that it will set up a UK onshore wind taskforce to unlock any financial, regulatory or policy barriers to deployment and restore a sizeable pipeline of new onshore wind projects in England. Our work on the Scottish onshore wind sector deal has shown the positive impact of government and industry collaboration on strategic initiatives.
We also anticipate new reviews to match onshore wind farm site finding with electricity demand in England, to ensure electricity supply is best-placed to minimise grid expansion costs. We may also see new incentives for industrial sites to install a small number of turbines.
Industry-watchers should be cautious to not be overly-optimistic for an onshore wind boom in England. It is likely England see a maximum capacity of 2 GW of new onshore wind by 2030, as the industry in England ramps up from a standing start. This compares to an expected 10-11 GW of new capacity in Scotland by 2030. Scotland will remain the epicentre of onshore wind in the UK for the foreseeable future.
Great British Energy
The second major change announced was the official launch of Great British Energy (GB Energy). GB Energy’s role remains unclear. Will it be another public financing vehicle for private investment? Or will it directly own and operate wind energy assets? The Government’s first King’s Speech stated that private sector alone is unlikely to deliver the scale and pace of investment need to meet 2030 electricity decarbonisation targets. This hints that GB Energy will in fact play the role of developer rather than another public green bank akin to the UK Infrastructure Bank or the (now privately owned) Green Investment Bank.
As a state-backed and organised entity, GB Energy will have good links to policy makers and regulators. It will be thus well placed to navigate seabed leasing, consenting and grid connection systems. This was demonstrated when GB Energy announced it would partner with the Crown Estate to accelerate the early stages of development for offshore wind projects. The Government states this will create 20-30 GW of new offshore wind developments reaching seabed lease stage by 2030. Financing will also likely be cheaper for GB Energy. Its investment appetite will be less susceptible to economic instability, which significantly slowed the industry in 2022-2023.
While questions remain about the exact function of GB Energy, the ambition for the company is clear. The Government has committed GB£8.3 billion over the course of this Parliament, a significant investment . These funds will be spread across several renewable energy sources. Juergen Maier, former head of Siemens in the UK, is the company chair – a reassuring hire. Time will tell whether the bold words and initial actions generate tangible results, and if GB Energy becomes a big player in the UK offshore wind industry. The company is brand new and though initial signs are encouraging, it has a steep learning curve to climb. It will take time to put together a capable team and bed in structures and processes. How GB Energy interacts with other developers remains a key question.
CfD allocation round 6
Finally, the Government announced a significant budget increase for Allocation Round 6 (AR6). This uplift includes £1.1 billion for fixed offshore wind, an increase of around £300 million compared to the original budget set in March. Established technologies including onshore wind has £185 million, an uplift of £65 million on the previous budget. Emerging technologies (including floating offshore wind) meanwhile has a new budget of £270 million, an uplift of £165 million compared to March.
This news will be welcome for the offshore wind industry, which has seen costs increase substantially since 2022 due to inflationary and supply chain pressures. As well as extra fixed offshore wind capacity, it will likely help deliver more floating projects which, in turn, should drive down costs of floating technologies and establish the UK as a world leader in floating wind.
The UK outlook
What does this all mean for the wind industry in the UK? The vast majority of these announcements are welcome. They signal a new Government with a clear mission to make the UK a “renewables superpower”. Nonetheless, challenges remain. Grid capacity will continue to be a major bottleneck for wind deployment in the UK. Skills availability will also remain an issue, with specialised personnel in high demand globally. The role of GB Energy, especially how it interacts with the private sector, is still unclear. The wind industry should still feel positive with a clear sense of Government support.
