No standing still on energy policy as the clean power debate heats up

As the UK swelters beneath the hottest May temperatures on record, it can be easy to assume that energy policy is a simple thing after all. Bask outside in that glorious solar radiation for as long as your supply of SPF allows. High renewable generation, coupled with low demand? Easy! 

Nothing as convoluted as energy could ever be that simple of course, and recent weeks have seen a swathe of new announcements from the UK government aimed at sheltering the country from the worst effects of international energy price inflation, which is kicking back into high-gear as the impacts of the Strait of Hormuz’s closure feed through to the domestic economy.  

Most notable perhaps has been DESNZ Secretary Ed Milliband’s announcements earlier this month regarding new measures to ‘break the link’ between wholesale gas and electricity prices. Demands for this kind of measure have been common in recent years, as many observers ponder why a country so focussed on achieving net zero would allow the price of gas to set its electricity price so frequently over the course of a year.  

Recognising that to truly ‘break the link’ would require some radical market re-design, the government’s main proposals are instead a mixture of carrots and sticks to encourage legacy renewable energy generators (i.e. those who are not covered by Contracts for Difference and thus receive the wholesale power price on top of some subsidies) to move voluntarily to a new category of Wholesale Contracts for Difference (WCfD). Assuming uptake from legacy generators is strong, it would provide greater price stability for consumers, while offering more predictable revenues to the generators themselves. Hardly a clean break, but if implemented correctly it could provide some much-needed insulation from the highly volatile international gas market, which is rarely far from wreaking havoc on energy bills.   

The months since the war began in the Middle East have seen sustained focus on the government’s energy policy overall, with the North Sea oil & gas fields among the issues to the forefront of debate. 27 May saw another intervention in politics from former Prime Minister Tony Blair, whose 5,700-word essay took aim at Labour’s mode of governing generally, but contained some pointed remarks around energy. 

The UK, says Blair, must “prioritise cheaper energy and electrification over net zero and use what is left of our North Sea oil and gas resources” if it is to remain competitive. Prioritising cheaper energy over a single-minded drive towards net zero is not a new demand, and groups including the Labour Growth Group have advocated for a re-framing of the ‘Clean Power 2030’ mission as the Labour leadership debate heats up. While the UK has been a leader in building out new renewable energy capacity, events have demonstrated that a focus on the affordability of power is unlikely to be going away any time soon. 

All Energy, all the time 

Glasgow hosted the industry-wide All Energy conference on 13-14 May and provided ample opportunity for the SEC Newgate team to connect with clients and contacts, gain policy insight and understand the next round of issues likely to face the sector. 

Delegates from across technology types tended towards the view that the policy environment for UK renewable energy development is in a strong position, with the Planning & Infrastructure Act, proposed changes to the National Planning Policy Framework and the forthcoming Energy Independence Bill all playing a role, alongside a raft of other regulatory and technical changes. 

At the same time, the emerging sense from across industry was that the system’s focus should not get bogged down in consenting, when there is so much delivery to get on with, across both construction and operation of new projects. Supply chain risks and the slow pace of regulatory reform will threaten the viability of projects and technologies without sustained, direct attention on reform. 2026 is likely to see a high level of further regulatory change as work continues on both the Strategic Spatial Energy Plan (SSEP) and the Reformed National Pricing programme (RNP). 

Do reach out via hello@secnewgate.co.uk if you’d like to explore how we can assist your engagement at a time of great change for the renewables sector.