UK Government launches infrastructure strategy consultation

The UK Government has published a consultation paper on its infrastructure strategy with a particular emphasis on the role on renewable energy and new technologies.

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The UK Government published the Green Paper "Building our Industrial Strategy" on 23 January 2017.

The Green Paper sets out three key challenges being:

  1. to build on strengths and extend excellence into the future
  2. to close the gap between the UK's most productive companies, industries, places and people and the rest, and
  3. to make the UK one of the most competitive places in the world to start and grow a business.

The Green Paper also identifies ten "pillars" which the UK Government believes are important to drive forward its industrial strategy across the entire economy being (i) science, research and innovation, (ii) skills, (iii) infrastructure, (iv) business growth and investment, (v) procurement, (vi) trade and investment, (vii) affordable energy, (viii) sectoral policies, and (ix) driving growth across the whole country, and (x) creating the right institutions to bring together sectors and places.

In relation to energy the Green Paper sets out the following points:

  • “The Government will set out a long-term roadmap in 2017 to minimise business energy costs. This will be informed by a review, commissioned by the Government, of the opportunities to reduce the cost of achieving our decarbonisation goals in the power and industrial sectors" (page 20).
  • “We will publish our Emissions Reduction Plan during 2017, providing long-term certainty for investors” (pg 94).
  • "We will review the case for a new research institution to act as a focal point for work on battery technology, energy storage and grid technology, reporting in early 2017” (page 94).

Affordable energy

In relation to affordable energy the Green Paper states:

“Industrial gas costs are internationally competitive but electricity costs have moved out of line with other European countries. During the last five years action has been taken to reduce the impact of policies on the electricity bills of eligible energy-intensive industries up to around 80%. This mitigation - including compensation worth around £260m for 2016 - is paid either by other consumers or the taxpayer. The difference between UK industrial electricity prices and those of other European countries is now mainly due to our higher wholesale prices and network costs. The industrial strategy provides an opportunity to explore ways of reducing overall costs in a sustainable way.

To this end, the Government will set out in 2017 a long-term roadmap to minimise business energy costs” (page 91).

Smart energy

In relation smart energy networks the Green Paper states:

"[The Government will look to] manage the changes to energy networks required in the transition to a low carbon economy. For example, the roll-out of electric vehicles may require important changes to the way our electricity grid works, including physical upgrades to the infrastructure and new frameworks for charging customers as they either discharge stored electricity into the grid at peak times, or draw from it at others. Ensuring that our grid is smart and resilient to new demands - and new sources of supply - will be important for energy security, cost and industrial opportunities" (page 90).

“The industrial strategy - and the combination of the policy portfolio of the former energy and climate change ministry with the business and industrial strategy brief, allows a more explicit strategic set of connections to be made. An example of this is the strong synergy between our strengths in the automotive sector, in clean energy, and in research and development. This paper commits us to a programme of research and innovation in energy storage and other smart technologies which aligns with the work underway on designing a smart grid and the roll-out of public charging points for electric vehicles, and smart meters at homes and commercial premises” (page 93).

“We are already testing the use of new grid technologies in various locations around the country in preparation for the shift to electric vehicles. To ensure that new energy technologies are developed here - and the UK benefits from global investment in this area - we have doubled support for energy innovation, and are already investing over £600m in support to accelerate the transition to ultra low emission vehicles. At the Autumn Statement 2016 additional funding of £270m was announced” (page 20).

“The Smart Systems Call for Evidence - recently launched with Ofgem - will report in 2017 on further steps required to take advantage of the opportunities for a more responsive network. This offers the further prize of bringing prices down by making more flexible alignment of demand and supply - meaning less need for costly permanent stand-by capacity” (page 91).

Climate change

In relation to climate change the Green Paper states:

“On climate change, the settled policy position is reflected in the Government’s commitment to meeting its legally-binding targets under the Climate Change Act. How we will continue to meet our legal obligations will be set out, as required, in the forthcoming Emissions Reduction Plan and we have an exemplary record of meeting our obligations” (page 89).

Growth - opportunities and strengths

Growth opportunities and strengths are identified as including the following:

"[The strategy aims] to make sure that the UK capitalises on its strengths in the energy industries to win a substantial share of global markets. These include in manufacturing and services around clean energy, but also making the most of our strengths in areas in which Britain has a lead, such as nuclear decommissioning and offshore oil and gas, including in clusters of excellence such as Aberdeen and other industrial hubs on the east coast” (page 90).

“In nuclear, the decision to proceed with the first new nuclear power station in a generation at Hinkley Point is accompanied by a commitment to develop a strong UK supply chain to support the sector, with EDF expecting over 60% of the project’s construction value to be placed with UK companies. In turn investment in nuclear skills - at college and university level - is upgrading both the domestic capacity to provide the labour required and the level of skills and income in the local workforce” (page 92).

“In renewable technologies, such as offshore wind, the long-term certainty of the policy framework has led to important new investments. Siemens’ turbine-blade plant opened in Hull in December, creating a thousand new jobs and sustaining a supply chain of smaller businesses servicing the industry” (page 93).

Comment

The prominence of energy within this strategy as one of the ten "pillars" and the creating of skilled jobs within the energy sector is a welcome boost. This is especially so in relation to innovative and new industries such as energy storage in relation to which the Green Paper states that a commitment will be made to "research and innovation in energy storage and other smart technologies".

The opportunity to the wider renewables sector is summed up by Emma Pinchbeck, Executive Director of Renewables UK who commented earlier this week that:

"The Prime Minster has taken a bold step by focussing specifically on innovative new industries where the UK is leading the world, and which are challenging the old order. That’s exactly what our wind, wave and tidal energy industries are doing by delivering affordable energy and clean growth - key pillars which Theresa May has set out in her bold vision for modern Britain.

It’s exciting to see a focus on innovative solutions such as electric vehicles, which will need clean sources of energy to power them. Moves to increase the use of energy storage and battery technology - one of the most exciting fields which our member companies are pioneering - with the creation of a new research institute will also ensure renewables remain at the forefront of our power generation.

Our offshore wind and marine energy industries are the envy of the rest of the world, with economic benefits being reaped around the UK from the shipyards of Liverpool to the banks of the Humber to the waters of Orkney. The global renewable energy market is worth $290bn a year, so it’s crucial that the final Industrial Strategy provides a strong Sector Deal for our wind and marine technologies.

Energy costs are crucial for all industries, so as this reboot for Britain takes shape, with renewable energy now a mainstream power source, we need to maximise the benefits we all get from the investments that have been made in modernising the way we generate electricity. This means that onshore wind has a key role to play in our future energy mix, as it’s the cheapest form of new power for Britain”.

The Green Paper sets out 38 questions for consultation and responses should be submitted by 17 April 2017.


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