On 30 March 2023, the new Department for Energy Security and Net Zero (DESNZ) published plans setting out how the government will enhance energy security, seize the economic opportunities of the transition to net zero and deliver against its net zero commitments. Sophie Drysdale and Shyann Sheehy examine the proposals.
At a glance
The Powering Up Britain policy paper brings together the Energy Security Plan and Net Zero Growth Plan in setting out the government’s ambitious plans to decarbonise, diversify and domesticate energy production thorough investment in renewables and nuclear. It specifically outlines DESNZ’s role in delivering energy security, consumer security, climate security and economic security and the next steps necessary to achieving the government’s net zero ambitions.
New opportunities
In these plans, DESNZ outlines a myriad of ambitions and funding commitments to achieve net zero by 2050. A key part of the support we offer to our local authority clients is helping them understand the obligations they face and the funds and grants for which they may be eligible. Below we summarise for local authorities the key funds (of which not all are directly available to local authorities, but all could be enabled by or potentially influence policy making of local authorities):
Power Generation
- Small Modular Reactor (SMR) competitive selection process – to ramp up nuclear capacity in the UK, selected technologies will be co-funded through their development and will receive support to secure appropriate financing and site arrangements. The newly established Great British Nuclear will launch phase one (market engagement) in April 2023 and phase two (down-selection process) in summer 2023, with an ambition to assess and decide on the best SMR technologies by Autumn 2023.
- Floating Offshore Wind Manufacturing Investment Scheme (FLOWMIS) – through this scheme up to £160 million in grant funding is available to support UK port infrastructure projects critical to the delivery of floating offshore wind at scale and at pace.
New clean energy systems and infrastructure
- Carbon Capture Usage and Storage (CCUS) – following the up to £20 billion funding announced in the 2023 Spring Budget, a Track-2 process has been launched to establish two new clusters for transport and storage systems located in the UK. Later this year, a process to expand Track-1 clusters will be announced.
- Hydrogen – DESNZ intends to launch two further hydrogen funding rounds this year from the £240 million Net Zero Hydrogen Fund, including a second electrolytic allocation round to support up to 750MW capacity.
Reducing demand by increasing energy efficiency
- Great British Insulation Scheme – this is a new Energy Company Obligation Scheme aimed at delivering up to £1 billion additional investment by March 2026 in energy efficient upgrades such as loft and cavity wall installation. Legislation to support the scheme is planned to be laid by summer 2023.
- Heat Network Transformation Programme – this programme is extended to 2028, with £220 million available over 2025/6 to 2026/7 to facilitate the continued growth of low carbon heat networks.
- Heat Pump Investment Accelerator – through this competition UK registered businesses can apply for grant funding for up to £15 million per project for major investments in the manufacture of heat pumps and strategically important components. This competition, worth up to £30 million in total, aims to leverage up to £270 million in private investment in the UK heat pump manufacturing supply chain and support the commitment to install over 600,000 heat pumps per year by 2028.
- Boiler Upgrade Scheme – this scheme is extended to 2028, with up to £450 million of grant funding available to support the installation of heat pumps and biomass boilers in homes and non-domestic buildings. Grants are available for £5000 towards the cost and installation of an air source heat pump, £5000 towards the cost and installation of a biomass boiler and £6000 towards the cost and installation of a ground source heat pump, including water source heat pumps.
Supporting the rest of the economy in the transition to net zero
- Industrial Energy Transformation Fund – there is a £185 million uplift for Phase 3 (open for new applications in 2024) to help businesses with high energy use to cut their energy bills and carbon emissions through investing in energy efficiency and low carbon technologies.
- Advanced Fuels Fund – a second application window opened on 30 March 2023 and will close on 7 June 2023. The fund will allocate a share of up to £165 million in grant funding to support the development and commercial deployment of innovative fuel production technologies.
Future opportunities
Looking ahead, local authorities should also note that:
- The government is seeking large scale solar deployment across the UK. It is looking for development mainly on brownfield, industrial and low/medium grade agricultural land, but is also seeking deployment of rooftop solar in commercial, industrial and domestic properties.
- The government is committed to changing the planning system to support net zero and energy security goals. It acknowledges the importance of an effective planning system in supporting both large scale nationally significant infrastructure and local decisions on renewable and low carbon energy. Five revised energy National Policy Statements covering Renewables, Oil and Gas Pipelines, Electricity Networks and Gas Generation, and an overarching Energy Statement are being published for consultation. A response to the National Planning Policy Framework consultation is expected in due course.
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