Following the UK election results, the incoming Labour administration’s ambition to drive forward the UK’s clean energy transition seems clear, and the sector will likely welcome today’s result. The promised, and long-overdue, unlocking of onshore wind development in England will be a quick and easy win for the new government which will help deliver new, low cost generation capacity to the system and burnish labour’s green credentials.
In offshore wind, the new energy secretary will face an immediate decision on budget for CfD round AR6. It is clear that there are more projects looking to bid in both the fixed and floating offshore wind CfD pots than can possibly proceed under the current budget. Indeed, it’s likely that the current pot 2 budget is insufficient to support even Flotation Energy’s 500 MW Green Volt floating wind project alone, which was a surprise late entry to AR6, securing its consent at the last moment. Under previous conservative administrations, competition in the CfD has always been prioritised over maximising capacity, but the industry will be looking closely at Labour’s decisions on AR6 for signs of whether this new government is ready to put its hand in its pocket to accelerate fixed offshore wind deployment and kickstart the UK floating offshore wind industry.
More long term, it will be interesting to see whether Labour considers more radical measures, such as fixed price or negotiated CfDs, to accelerate deployment and unlock supply chain investment. Critical also will be its approach to tackling bottlenecks to deployment. Labour has already announced an ambition to invest £1.8bn in UK ports, which is welcome. Spending this money well is not always easy however. Labour’s approach to unlocking critical investment in grid infrastructure to unlock accelerated deployment, including tackling the planning and consenting challenges which constitute a major risk to development of both wind power projects and new grid infrastructure will also be key.
Finally, there remains a big question mark over GB Energy, and the role it will play in the UK’s energy transition. There is little detail current around whether GB energy will be a project developer or an investor. Either way, getting the implementation right, and ensuring GB energy is a capable organisation which offers value not already provided by private industry, while at the same time not unduly distorting the competitive landscape will be a very tricky thing to get right.
