Energy Archives - WA Communications

Powering on: what have we learnt about energy from this year’s party conferences?

With energy and climate being one of the policy areas where the new Government have built most momentum, the sector is getting to grips with what’s likely to come next and how this will be sustained over the course of the Parliament. Net zero was a significant focus at both the Labour and Conservative Party conferences, although with vast differences in how it was approached.

What has the last fortnight taught us over how both parties are approaching energy and decarbonisation, and what emerging trends became clear at fringes, in the keynote speeches and in side discussions between industry? Here are our reflections on what we learnt.

There’s a tension emerging between delivery against generation targets and using this investment to drive wider social change

The energy sector has a critical role to play in at least two of the Government’s Missions: Clean Power by 2030 and Economic Growth (and arguably also the Opportunity Mission considering the critical importance of skills). The fastest, lowest cost and most efficient delivery of projects is essential to ensure success against these agendas. However, it’s also not a secret that Labour governments are keen to deliver social change. The phrase “inclusive growth” was used repeatedly by Cabinet Ministers in Liverpool.

But can you deliver projects as quickly as possible while also maximising their social impact? While Ministers are clear that they are prioritising project delivery, important voices within the wider Labour movement are calling for policy changes that will ensure the UK’s energy system is more actively used as a vehicle for delivering social reforms.

Nature groups are campaigning for an amendment to the Great British Energy Bill which would give the new body an “environmental duty”, with a requirement to consider the impact on biodiversity. Trade union representatives used contributions at fringe events in Liverpool to advocate for public subsidy and financial support – through the Contracts for Difference (CfD) mechanism, the British Jobs Bonus and the National Wealth Fund – to be conditional on developer commitments around UK content and supply chain support, and trade union recognition for their workforces.

While these proposals are not government policy, they demonstrate the different pressures that Ministers are facing and that business need to be attuned to.

Technologies that will have a role to play after 2030 need to be making the case now for attention

The 2030 Clean Power Plan that Energy Secretary Ed Miliband and the head of Clean Power Mission Control Chris Stark have tasked the newly established National Energy System Operator (NESO) with creating this Autumn will create a clear pathway for projects and technologies that will be essential to meeting this target. There’s likely to be a much smoother delivery pathway for these projects – with the prospect of preferential access to grid connections for example.

However, there’s a clear risk for those technologies that aren’t identified as fitting into this category, but that are likely to have a medium to long-term role including to meet 2050 targets. Nuclear and likely some carbon capture and hydrogen projects are most impacted.

It’s not to say there is no political support for these projects or technologies, however a tunnel-vision focus on 2030 creates a risk of more limited political attention for these solutions and the policy steps required to help them progress being deprioritised.

Industry have a narrow window to make a very clear case to government and NESO now on the 2030 contribution that these projects and technologies can make, and to articulate the risks for future viability – which will still be needed to hit future targets – if progress slows and key decision points are deferred.

Market reform is reappearing on the policy agenda

Reforming how the electricity market works is divisive within industry. The review of electricity market arrangements (REMA) process has occupied significant political, policy, regulatory and industry time and attention to date, with little tangible progress.

However, in the fringe discussions in Liverpool and Birmingham, the debate was reopened. Advocates for a more locational approach to electricity market pricing argue that it will reduce bills. The case against is essentially that the benefits are overstated, and it will create significant market disruption.

There won’t be quick solutions to this one but expect the discussion to intensify over the next six months or so.

Heat decarbonisation is the next big issue on the policy agenda

It’s not a surprise that the Government has sought to deliver as many ‘quick wins’ as possible in the first 100 days, with a particular policy focus on renewables. Limited bandwidth means political attention has been directed towards this part of the energy market.

But with many tough challenges to address across the energy market, this focus will need to widen throughout the Autumn and beyond. It was clear from talking to politicians and industry at both Party Conferences that heat decarbonisation is likely to become a key focus over the next 6-12 months. Often neglected and seen as too difficult to solve, how to decarbonise heat and buildings can’t easily be ignored for much longer.

With key decisions over future technologies expected to be taken in 2026, impatience from industry for the introduction of the Future Home Standard and questions over exactly what Labour’s Warm Homes Plan looks like, this is a theme that will occupy much more policy, political and media time in the months to come. It’s also a space where the government’s thinking is less mature, creating significant opportunities for constructive solutions – both at a policy and delivery level.

The future direction of Conservative energy policy is starting to emerge

The outcome of the Conservative leadership election at the start of November will clearly shape how the Party scrutinises Labour’s energy policy over the course of this Parliament. However, a number of themes are already becoming clear. At the heart of it is likely to be a focus on supporting new nuclear – a combination of GW scale and newer technologies like SMRs, AMRs and fusion. The support for nuclear from Conservative Party politicians at panel discussions in Birmingham was fulsome, and centre-right thinkers are pushing the technology heavily. Conservative Party politicians believe that Labour’s support for the technology is relatively shallow, offering them a chance to highlight policy gaps.

Beyond this, expect continued scrutiny of the impact and value of GB Energy, continued support for North Sea oil and gas, and an argument that the 2030 Clean Power target is creating unintended consequences – increasing the whole system costs of renewables and leading to a lack of focus on medium to long-term technologies. The challenge in the long run will be how to build a distinctly Conservative policy platform while engaging constructively with a government agenda which they instinctively perceive as overly centralised and planned.

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‘We’re getting nerdy, and our audience is coming with us’ – the shifting focus of energy reporting

This morning, WA Communications hosted a roundtable bringing together energy industry comms leads with three of the UK’s best-regarded energy correspondents: Jillian Ambrose (Guardian), Emily Beament (PA Media) and Rob Horgan (Utility Week).

The session explored the shifting media landscape, and what journalists are looking for from energy companies in the coming months – with all three journalists agreeing that readers are increasingly interested in the technical detail driving the net zero agenda and how it impacts their day-to-day lives.

A wide-ranging discussion followed – the key takeaways are outlined below:

There’s been a huge a shift in focus areas for energy journalists as they follow the interest areas of an increasingly engaged readership.

The more technical aspects of reporting – such as heat pump roll outs, or grid connection queues – have rapidly become a focus area for all energy reporting, when previously they might have been purely the remit of the trade press. These issues that previously might have only been covered by B2B trade press are generating high levels of engagement, not just in terms of clicks but with readers spending longer digesting technical and policy-driven aspects of reporting.

Holding the Government to account and demonstrating progress against stated ambitions will become increasingly important.

With a highly ambitious green agenda set out by the new Government, a key focus for energy journalists in the coming months will be to assess progress against stated targets. This won’t just be a case of asking probing questions around delivery timeframes; it will also mean scrutinising the efficiency of delivery – and any gaps. To some extent, the same will be true for businesses and how they are playing their role in contributing to the UK’s net-zero ambitions. Businesses that aren’t used to being held accountable on difficult questions can expect to face much higher levels of press scrutiny in the coming months.

Data remains king for energy reporters

With more technically-minded reporting lines, journalists are looking to businesses to provide data and insight they might not otherwise have access to. It’s no longer enough to put out a bold, inflammatory comment and hope it’s enough to inform what are inevitably complex and highly politicised conversations. Businesses need to be truly leading and informing these debates with real insight – and direct access to CEOs or members of staff that can speak to the data in a lot of detail will inevitably jump to the front of the queue.

There are topics flying under the radar that could heat up in the coming months as they start to impact readers’ day-to-day lives.

As the reality of net zero delivery and what it means for consumers starts to become more understood, further thorny issues will inevitably start to surface. We’re starting to see this with pylons being built across East Anglia which, over the past few months, has rapidly become a national topic of conversation. We can expect the elevation of ‘local’ issues to continue to snowball as consumers – many of them ardent net-zero supporters – are faced with the reality of what reaching this target means for them. Gas decommissioning was highlighted as another “elephant trap” that is currently yet to surface to the mainstream press.

For further information and data-driven insights, you can download our full report here.

WA Comms works closely with leading generators, global power management companies, clean tech start-ups and EV disruptors to secure impactful media coverage that supports commercial outcomes.

If you would like to discuss how we can help you, please contact:

Rachel Ford, Director, rachelford@wacomms.co.uk.

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GB Energy – Powering the future

Unpacking what GB Energy means for industry and consumers

As the dust settles on the Government’s Great British Energy (GBE) announcement last week, industry and consumers alike are left wondering what the new entity really means for them. While Government is clear it wants to make a fast start on delivering its clean energy mission, clarity on how this will be fulfilled remains unclear.

1. Complementing, not duplicating, the private sector’s role

Offshore wind continues to be a focus of the government’s communications around GBE, especially following the news of the Crown Estate partnership. This has created concern that GBE might result in the displacement of private capital already poised for investment in mature technologies like offshore wind, vital to the Government’s 2030 clean power target.

The announcement also touched on less mature technologies like carbon capture and storage (CCS), hydrogen, wave, and tidal energy. With a limited budget of £8.3 billion over the Parliament, there is broad consensus from industry that GBE could play a more effective role in de-risking investments in these emerging technologies, rather than competing with private investors. By acting as a state-backed co-investor, GBE could provide the necessary reassurance to unlock private sector funding for these “riskier” ventures.

Even for mature technologies, existing mechanisms like the Contracts for Difference (CfD) scheme have faced challenges. Despite the last Government’s ambition to reach 50 GW of offshore wind capacity by 2030, the 2023 auction failed to secure any offshore wind projects due to misalignment between bid prices and actual project costs. While underfunded auctions are designed to maintain competitive tension among developers, relying solely on CfDs might limit the potential scale of investment that is possible. GBE could play a valuable complementary role here

2. Cutting consumer bills

It was striking, albeit not surprising, the extent to which the questions Keir Stamer faced after his speech in Runcorn on Thursday, and that Ed Miliband faced during media rounds that morning, were focused on the impact of GBE on consumer bills. The pair faced scrutiny as to whether they could ‘guarantee’ a £300 reduction in bills and quite how quickly this would be felt. This follows a trend throughout the election campaign, where there was clear confusion from members of the public about just exactly what GBE would be – with many people expecting the new entity to be a retail energy supplier they could switch to and immediately start saving money. Polling by Common Wealth found that 53% of Labour voters expect energy bills to fall during this Parliament as a reuslt of GBE.

Despite recommitting to this figure again and again, there remain questions over how this will be delivered. Moving to a renewables dominated grid will in theory enable lower prices, but wider market reform will be necessary to deliver this – for instance decoupling electricity from gas prices and rebalancing ‘green’ consumer levies between electricity and gas bills.

Fundamentally, the prevailing view from industry is that the creation of GBE alone won’t deliver the level of savings that consumers want to see, and wider reform is needed to bring down energy bills and meet this ambition. But whilst the REMA process remains ongoing, the industry has been clear that revolutionary market change will be challenging at a time where there is significant pressure to reach ambitious power decarbonisation targets.

3. Skills and supply chain vital to the 2030 target

The new government has set out its ambition to reach a decarbonised power system by 2030. But having enough clean power, both through a varied renewables fleet and abated gas power plants, will require the UK having in place robust supply chain networks and a skilled workforce that gets us there quickly.

The new government clearly wants to make a fast start on the clean energy transition, bringing forward new renewable infrastructure at scale and pace. However, developers are already struggling with the current scale of delivery, facing challenges accessing the supply chains and talent that they need. In recent years, job vacancies in green industries have been around 17 times higher than those in high carbon jobs.

As well as investing in the development of new renewable projects, GB Energy alongside other initiatives like the National Wealth Fund and Skills England (announced at the King’s Speech) must prioritise the development of vital supply chains – both domestically and abroad – as well as investment in the skills and workforce needs of our low carbon future. Unions and trade bodies will be looking for reassurance that government will help ensure that training and support is provided to deliver the jobs to energise GB Energy.

Conclusion

The establishment of GBE presents both opportunities and challenges for the UK’s energy sector and consumers. While the government’s ambition to accelerate the transition to clean energy is clear, the specifics of GBE’s role remain uncertain. The focus on complementing private sector investment, particularly in emerging technologies like carbon capture and hydrogen, could help de-risk these ventures and encourage further private funding. However, the initiative alone is unlikely to deliver significant consumer bill reductions without broader market reforms. Additionally, achieving the 2030 decarbonisation target will require a substantial investment in supply chains and skilled workforce development. The success of GBE will depend on effective collaboration between government, industry, and other stakeholders to address these critical issues.

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How does Labour deliver its Clean Energy Mission?

With commitments to establish a ‘publicly owned energy company’, rewire Britain’s electricity grid and expand renewable generation, the Labour Party’s 2024 manifesto outlines an ambitious plan to make the UK a “clean energy superpower”. Ahead of polling day, WA hosted leading figures from across the energy sector for a discussion on how a Labour government would look to achieve its goal of decarbonising the UK’s energy supply.

Contributors including Paul McNamee, Director of the Labour Climate and Environment Forum, Sue Ferns, Senior Deputy General Secretary of the trade union Prospect and Chris Hayes, Chief Economist at Common Wealth discussed how Labour can practically deliver its ‘clean energy mission’.

Here is what we learnt about the direction of energy policy under a possible Labour Government:

1. Quick decisions need to be made

The incoming Energy Secretary will face a packed inbox of ‘legacy’ issues carried over from the last government. Many major policy decisions need to be made by the end of the year, some this summer. These include the sixth allocation round of the contracts for difference (CfD) scheme, the future of Sizewell C, SMR funding and CCUS deployment.

Potential Energy Secretary Ed Miliband is expected to make clear, positive decisions in these areas to back the technologies required for the UK to achieve net zero. Labour and Miliband will look to portray these decisions as totemic, representing how the party is making the bold choices necessary to deliver their green prosperity plan.

Miliband, who will likely be one of the few new Secretaries of State with previous experience of Government, would also be able to use his prior learned experience and institutional knowledge to immediately drive forward Labour’s energy plans. This would be in contrast with other Secretaries of State who would need time to get to grips with the machinery of Government.

Planning reforms to get more renewable generation in development are also likely to be a priority across the first 100-days of a Labour administration. These reforms would entail regulatory overhaul as well as bolstering planning departments who have experienced a reduction in workforce and investment over the past 14 years.

2. Informed backbenchers with an interest in energy policy

The next parliament will perhaps be the most engaged and informed parliaments on energy policy that we have seen in recent years. Many Labour PPCs contesting swing seats including Melanie Onn (former MP for Great Grimsby and previously Deputy Chief Executive of trade body RenewableUK), Mary Creagh (ex-MP for Wakefield and sustainability advisor) and Polly Billington (founder of UK100) will be hoping to enter parliament directly from careers focused on energy and climate issues.

If the best-case scenarios for the Labour Party are correct and the Conservatives suffer what would effectively be a wipeout across the country, Labour PCCs contesting traditionally safe Conservative seats could find themselves on the Labour benches following July 4th. Two such candidates with energy backgrounds are Luke Murphy in Basingstoke and Ryan Jude in Tatton. Murphy is on leave from his post as Head of the Fair Transition Unit at the think tank IPPR while Jude is a Programme Director at the Green Finance Institute.

These MPs with a nuanced understanding of how the energy sector really works, of which there will be many, will be important in shaping policy and holding to account frontbench’s energy priorities.

There is a risk however, that if a Labour ‘supermajority’ transpires, the Labour benches could have ta higher share of inhabitants representing rural areas – in places like East Anglia – where residents are typically more sceptical on the issue of hosting energy infrastructure. This creates the possibility of rising tensions between the leadership’s ambition on energy, and backbench MPs who will be wanting to be seen to be representing their local interests.

3. Managing expectations around GB Energy

While there is clearly an optimism within Labour that the party’s energy policy package will get the UK well on the road to net zero by 2050, there are many areas in which important details and plans are missing. For instance, questions remain over the much-touted GB Energy and how it fits into the existing energy system and infrastructure.

Many voters have a misunderstanding about GB Energy’s role, not helped by the lack of detail early on its policy formation. Polling and focus groups suggest that some voters believe that it will be a consumer facing energy retail company, rather than an energy developer. This misunderstanding of a flagship policy could lead to trouble for Labour, and the energy industry as a whole, if voters do not feel any benefit by the next election. A Labour government will have an important job to do early in its first term to manage expectations, so that by the time of the next election it can show that GB Energy has delivered.

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Tackling the £28bn question

It’s been the political headache facing Labour for nearly a year – questions over exactly how their Green Prosperity Plan will be funded and delivered. The multiple climbdowns and the significant deliberate ambiguity were not enough to fend off their critics, who identified – rightly or wrongly – an area of vulnerability for the party.

The electoral and political implications are dominating the media, but what exactly does this now mean for the energy industry?

For industry, the ambition and targets are more important than the funding

While the media has been focused on the level and sequencing of government funding for the Green Prosperity Plan, for industry this is arguably the less critical issue. Generators and others in the sector want policy certainty and ambition in order to be able to make the case to their boards and investors to deploy capital in the UK.

The 2030 target – even if it is recognised as being virtually impossible to deliver – provides this. While backsliding over the £28bn figure could be perceived as a signal that Labour is wavering on green investment, it’s the 2030 target that really matters. Recommitting to this yesterday was key. The question now is whether Labour is willing to take the bold steps required to deliver it…

As political and media attention shifts to how 2030 power decarbonisation can be achieved, there’s risks and opportunities for the sector

However, the reality is that the political and media focus will simply – and we’re already starting to see this – shift to scrutiny of how this target will be delivered, with critics arguing that Labour now have a hugely ambitious target in place with no investment behind it to enable delivery. The political argument that the government and others will prosecute will be that either Labour are selling a vision to the electorate that they know cannot be delivered and so aren’t prepared for office, or that there will inevitably be ‘secret tax rises’ coming to fund this.

Further backsliding from Labour on the 2030 target should not be expected, but the risk of disagreements opening up within the party over it is unhelpful for industry particularly if enhanced media focus ends up driving up public scepticism over the right route to net zero.

The opportunity for industry now is to highlight even more clearly how it will be private capital that will do the heavy lifting to decarbonise the economy. As Labour – and the media – look even more closely at how power decarbonisation is achievable, now is the moment – in a highly political year – for industry to be explicitly showcasing the projects that will practically get the UK to net zero.

Strengthening the argument for bold supply side reforms?

To achieve private sector delivery at pace, the case for non-financial supply side reforms that enable projects to move from plans to reality in order to achieve 2030 power decarbonisation becomes even stronger. Grid connections and planning reform; swifter, longer-term and more consistent policy decisions; the right fiscal environment to encourage investment are all being pushed.

Ed Miliband has spoken ambitiously about a ‘Covid taskforce’ approach to government, hitting the ground running from day one to deliver the Clean Energy Mission. Industry is getting the right noises from government with a recognition that it gets the scale of the challenge, but if there is any chance of coming even close to the target, these things are now non-negotiable. Labour has already notionally committed to acting on these things, but the industry’s ability to press for these changes at pace and ensure full accountability for delivery has arguably been strengthened significantly this week with funding now reduced.

There are inevitably still plenty of gaps

While the ‘plan’ published yesterday provides a little more detail in some areas – particularly on the Local Power Plan – there are inevitably still large gaps and areas where industry is still lacking detail.

There are also still questions over exactly how key parts of Labour’s net zero vision – including carbon capture – will be funded.

This gives industry the chance to continue to shape the right pathway for delivery. Labour wants solutions – ideally with no or little costs attached – that will help the delivery of its Clean Energy Mission. This is the moment for industry to share thinking on how specific elements of the plan can be implemented, aligning business priorities with Labour’s language, structures and funding envelopes.

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Resetting net zero: the implications for business?

One of the key questions on the minds of business representatives attending Conservative Party Conference in Manchester this week will be just what the implications of the Prime Minister’s reset on net zero are. Industry will be looking for reassurance from ministers over the coming days that the broad net zero agenda remains in place and for confidence on other policy measures.

Last week, WA hosted a webinar with Nathalie Thomas, former Energy Correspondent and writer of the FT’S LEX column and Sam Hall, Director of the Conservative Environment Network to explore whether the political consensus on net zero is broken, and if it is, what that means for business.

These are our key takeaways:

1. There may have been limited substantial policy changes, but it has still caused uncertainty

The Prime Minister’s speech gathered significant interest, but on the substance, it arguably moved the dial less. While the phase-out date for petrol and diesel vehicles has shifted back five years, the ZEV mandate proposals announced by the government in recent days showed there will still be a very significant increase in EVs as a proportion of the market by 2030.

There are large swathes of the net zero agenda – particularly on industrial and power decarbonisation – that have not been impacted by these specific proposals. However, Sunak’s speech still caused concern and disruption to many of these businesses. For businesses and investors the sense that long-term policy frameworks could change so suddenly, has cast doubt over the certainty and stability of other policy areas.

2. It’s all about the politics

As we enter a critical general election campaign businesses need to recognise that politics is ruling the day. Ideas may stand up on pure policy and technical terms, but if they don’t fit into the government’s political agenda they’re unlikely to be taken seriously, and policy already in train that doesn’t meet this test could be under threat.

This means it is essential for business to fully understand the different factions and priorities within government, and knowing who’s influencing No10 and key departments. Messaging and policy asks from businesses need to be aligned with these political trends to succeed.

3. But how effective was the political trap the government tried to set for Labour?

The motivating factor within government was to force Labour into having to defend policies presented by government as expensive and disruptive to consumers. No10 wanted to create a ‘wedge’ between the parties. The Labour Party appear to have avoided this with a pragmatic commitment to reinstate the 2030 ICE phase-out date and by suggesting they will review the approach to domestic heating if they enter government.

The Conservative Party’s position in the polls has stabilised, and in some cases improved since the speech, but it is still to be seen whether it changes the fundamentals ahead of the general election. Currently, that doesn’t appear to be the case.

4. Businesses can do more to communicate the benefits of the green transition

Businesses are understandably frustrated at the policy instability. However, it also places the spotlight on the responsibility that businesses have to make the case for net zero and the green transition. The Prime Minister’s renewed focus on consumer affordability makes it even more critical for businesses to show that the agenda – and specific policies that will fit within it – will reduce costs for consumers and offer the best value for taxpayers and consumers.

Equally, the promise of ‘green jobs’ is made regularly, but there’s a renewed opportunity in the run-up to the next general election for businesses to be more specific and tangible about this – where are these jobs, what will they look like, how can they show they are ‘real’ and not just numbers from a spreadsheet?

This will make it much harder for policymakers to row back on the wider agenda in future, with clearer acceptance of the benefits and value, with net zero not just perceived as a cost.

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UK’s largest power generator, RWE, appoints WA Communications to lead integrated strategic comms brief

Energy giant RWE, which produces around 15% of the country’s electricity, has appointed WA Communications to lead a two-year-long integrated communications programme, following a competitive pitch process.

WA – ranked as one of the UK’s Top 3 Public Affairs agencies in this year’s PR Week’s Top 150 table – will be supporting RWE as they look to work closely with the Government to deliver on its energy independence, affordability and Net Zero ambitions.

With a diverse operational portfolio of renewables and gas, RWE is at the forefront of delivering the UK’s Net Zero transition – and leading the way in cutting edge energy technology such as Carbon Capture and Hydrogen.

The wide-ranging brief will cover both political engagement and corporate communications, building on WA’s experience in integrated strategic communications, and leverages the firm’s deep energy expertise – with RWE joining its extensive roster of existing clients across the sector, including energy storage company Eaton, and clean-tech innovator Enertechnos.

Commenting, Dominic Church, WA’s Managing Director said:

“Energy is in the political and media spotlight like never before, and the Government needs to show it is acting to address well-publicised energy security and affordability concerns of voters – while at the same time maintaining progress against Net Zero targets.
“This puts an enormous onus on the energy industry to be providing solutions now to the current Government, while Labour is increasingly eager for industry input to flesh out their ambitious green energy plans ahead of the upcoming election.
“RWE sits right at the heart of this challenge, and we’re hugely excited to have been brought on board to deliver an integrated programme of work, as they look to navigate the turbulent months to come for the industry.”

Alice Barrs, RWE’s Head of UK Policy and Public Affairs said:

“We knew from the outset that we needed an agency that would take an integrated approach to the challenges RWE were facing as the UK looks to transition to Net Zero, and ahead of a General Election most likely next year.
“With its deep roots into Labour, and the team’s energy sector expertise – across both public affairs and comms – we knew that WA would be a great fit for this programme of work.”

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Labouring to the point

Even though the energy crisis has taken a back seat in the news cycle, the impact it has had on consumers, their behaviour, and overall public awareness of where their energy comes from, is stark.

However many industry commentators believe that, to date, very little has been done by the Government to prevent such a crisis from happening again.

With several complex, but complementary, policy issues remaining high on voters’ agendas, the Labour Party has been tentatively navigating complex waters as it sets out its stall ahead of the next General Election, looking to capitalise on perceived current inaction.

Climate change, energy costs, and energy independence is a challenging trifecta to find a solution to at the best of times, let alone when the overriding priority is to project economic competence and fiscal trustworthiness.

An additional twist in the tale for Keir Starmer has been the dramatic way in which Scotland has electorally come into play, which 12 months ago he could only have dreamt of. Labour is now facing the very real prospect of tangible, double-digit Parliamentary gains north of the border, which could make the difference between a clear majority, or a hung Parliament.

Balancing each of these considerations has seen a number of previously solid commitments become softened, watered down, or changed altogether.

Two headline pledges, no new oil and gas licenses, and investing £28bn a year in green infrastructure, have been the main casualties.

The latter has been slightly amended so that instead of the full annual investment starting immediately, it’ll be built up to in the first half of a Labour Government. This has generally been interpreted as a pragmatic move, as deciding what to invest that level of money, finalising deals, and then spending it within 12 months was perhaps always an unrealistic timeline.

The former has been somewhat more eventful. Rifts have opened within the Labour front bench; and the unions, most notably the GMB, have started flexing their muscles. In addition, Anas Sarwar’s political capital has grown exponentially, making him an even more influential figure in the Party machine.

The result? A fudge. Labour will now honour any licences issued before the election, their position on CCS has suddenly become very positive, and the previous ban on new licences has now been limited to only blocking new exploration licenses, a minor but crucial difference, specifically aimed at keeping Scotland in play.

Beyond it being a fantastic case study for observers as to how the levers of power within the Labour Party work, it’s also a strong indication as to how seriously Keir Starmer is taking the Party’s policy development, not letting anything jeopardise any chance he may have of becoming the next Prime Minister.

‘Next Left’ – WA’s recently published Guide to Engaging with the Labour Party – explores the people, processes and politics shaping the development of Labour’s next election manifesto, and how businesses can engage with the party’s plans.

We will shortly be releasing a deep-dive specifically exploring the Labour Party’s emerging energy sector policies. To receive a copy, please email angushill@wacoms.co.uk.

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Powering up?

Yesterday’s Powering Up Britain announcement had been trailed as a gamechanger for the country’s energy transition: the UK’s response to IRA in the battle for green investment. But to what extent does it shift the dial on the government’s priorities and give confidence to investors? WA’s energy team reflects on what it means and looks ahead to what’s coming next.

1. Yesterday’s announcements mark an important albeit incremental drive to ‘power up Britain’

Much of the commentary following yesterday’s package has focused on the relatively limited nature of the announcements: there was very little in the way of new funding announced, many policies from existing strategies and publications repurposed, significant reforms that are urgently needed – for example on planning reform for onshore wind – pushed into the future, and the number of specific projects backed on the low scale of expectations.

All this is true, but the fact that ‘Powering up Britain’ was neither radical or fast enough to meet key national ambitions, doesn’t mean it’s not welcome or important. Industry repeatedly calls for a renewed focus on ‘delivery’, with key targets and objectives already agreed. Yesterday’s announcement represents movement on ‘delivery’ – the hard policy grind that is necessary to move progress to targets forward.

Upcoming announcements on grid connections and onshore wind will also be critical to increase the pace of renewables deployment.

2. Picking winners (and losers)

Governments – particularly this one – dislike being seen to be ‘picking winners’ and choosing which businesses thrive. However, it’s a core theme of yesterday’s package, particularly picking the early leaders within technologies. Yesterday showed that government is committed to backing a broad range of technologies – as the Energy Minister Andrew Bowie reiterated at a dinner hosted by WA earlier this week. However, not every project within those technology types will progress – there will be winners and losers.

Across different sectors – from new nuclear to CCUS and hydrogen – government is using competitions between projects and firms to identify which they will back. This isn’t new – in effect this has happened with the CfD regime within renewables for some time – but it’s now been embedded across the sector. This very starkly exposes that within the UK energy market, project developers and investors are dependent on government permission and support to progress. There are clear commercial consequences – the impact on the share price of both the winners and losers of CCUS and hydrogen competitions yesterday neatly demonstrates this.

One critical consequence of this is that it makes it even more essential for those wishing to progress projects to make a strong case for their individual investment and to be able to differentiate it from competitors. As well as having a strong technical case, this means telling a story. How will this specific project or technology tangibly improve the local community by delivering economic growth jobs and a strong supply chain? How will it meet the government’s ambition for low cost, homegrown power more effectively than other solutions? Do you have influential champions for your project? It’s no coincidence that Teesside was a big winner on CCUS and hydrogen yesterday, with a Mayor in Ben Houchen who has made this a priority. In an election year, showing the political ‘win’ as well as technical competence is critical.

3. Home decarbonisation is the piece of the puzzle policymakers still struggle to solve

The one part of the decarbonisation challenge that arguably lost out yesterday was home decarbonisation and domestic heat. It’s a problem that successive policymakers have struggled to grapple with, but the measures announced yesterday will not yet do enough to fundamentally address the scale of the problem.

Take the government’s announcement on the establishment of a Great British Insulation Scheme. The 300,000 homes this will focus on are just a drop in the ocean of the number that need to be improved. Unlikely power decarbonisation, addressing this is much more piecemeal and requires significant consumer engagement and behavioural change.

The second big challenge is the choice of technology to heat those homes. This is one area where the government is – perhaps understandably – less keen to pick winners, worried about the political consequences of mandating higher cost solutions that will require significant disruption to consumers.

However, yesterday’s announcement conceivably gave the biggest steer yet that the government is leaning towards electrification over hydrogen as the primary solution for homes (albeit ultimately there will need to be a mix of technologies) with an extension to the Boiler Upgrade Scheme and a vision that in the future, “people’s homes will be heated by British electricity, not imported gas”.

4. Bigger things to come?

This package of announcements is important, but not enough. It is a critical step in providing clarity on the competitions, policy frameworks and future schemes required to encourage external investment but it won’t be a gamechanger.

Industry will be looking ahead to see what’s beyond this that might fundamentally shift the dial, and there’s two things to consider:

Greater financial firepower at the Autumn Statement?

The Chancellor has promised that the government’s full response to IRA will come in the Autumn, arguing that it will be ‘different – and better’. Those looking for a game changing moment – matching the simplicity the IRA mechanism – have the next six months to make the case for what this looks like.

While we’re currently in a fiscally constrained environment, the government has signalled that it will turn the spending and tax cutting taps on ahead of the next election. The argument needs to be made – partly through Lord Harrington’s review into foreign investment – as to how deploying it to support the green transition will give the government the greatest political impact. However, the delay in getting this full response to IRA and the Chancellor’s insistence that the UK isn’t about to enter a subsidy race, should constrain confidence amongst the industry.

A future Labour government?

In stark contrast to the incrementalism of this government, is the radicalism of Labour’s plans on energy. In his speech earlier this week, Ed Miliband highlighted the differing approach a Labour government would take – more ambitious targets, greater public spending (£28bn in borrowing per year and a new national wealth fund),and a much more muscular and interventionist role for the state (including a public sector energy company, Great British Energy). The ambition and pace can’t be doubted, but there remain questions over the deliverability and the solidity of this level of public spending in a challenging financial context.

WA’s upcoming report into Labour’s energy plans will delve much deeper into this, looking at the outstanding questions that remain.

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What does a government restructure mean for the energy sector?

You’d be forgiven for having a sense of déjà vu with the announcement of a new separate Energy department, with a return to the structure of the Brown and Coalition governments. With Rishi Sunak committing to this change in his summer leadership campaigns, and recent reports from Chris Skidmore and Andrea Leadsom both recommending this, it felt inevitable. It is however unusual to make such a radical change so close to the next election.

So what does this mean for the energy industry, currently seeking to deliver a transformational shift to a low carbon economy?

A risk of short-term disruption as the department ‘beds in’

Major machinery of government changes take time, effort and focus, particularly from senior officials. Establishing a new department creates short-term uncertainty amongst officials and risks urgent policy priorities being deprioritised.

The retention of the current political team – Shapps, Stuart and their advisers – maintains policy leadership and largely ensures a continuation in approach.

A more focused department doesn’t necessarily mean better outcomes

One school of thought is that a singular focus from the new department on energy will deliver better results, without the distraction of other business issues and with the whole department aiming in the same direction.

This may well be true, but a new department – even with a competent and respected Secretary of State – is on its own not going to move the dial on key sector agendas, such as planning reform and changes to the grid to speed up offshore wind deployment or establishing a hydrogen market in the UK. Achieving these requires a more radical and ambitious approach to policy delivery, which ultimately needs the support of the political centre, namely No10 and the Treasury.

As the next General Election gets closer, there’s a clear risk for the sector that the singular narrative focus from government on the Prime Minister’s ‘five key priorities’ pushes aside the detailed policy action required for the UK to stand any chance of achieving its 2035 power decarbonisation target. The industry’s priority has to be to frame its case in terms of helping achieve these goals, specifically on driving economic growth and halving inflation.

Framing arguments through an energy security lens

Government messaging on energy has been shifting to focus on energy security for the last year, with an even greater focus post the Johnson government. The unveiling of the new department does highlight this shift in government focus very starkly: energy security is specifically mentioned in the name, and prioritised over Net Zero; and the absence of any reference to low carbon power or green growth in the government’s overview of the department, focusing purely on security and affordability.

The industry has made a strong case that low carbon power and energy independence are two sides of the same coin, and there needs to be no choice between them. However, there will be a need to double down on this case, and to shift messaging to emphasise the benefits to security of supply when seeking government support.

The industry will have to work harder to make the link to economic growth

Climate advocates within the Conservative Party have long sought to frame the case for action on Net Zero through the lens of green growth and jobs. The location of major projects, be that the renewables sector, hydrogen projects or new nuclear sites are in traditionally economically left behind areas of the country. The Net Zero transition is one of the clearest routes to delivering levelling up.

The combination of energy and business policy within one department made it easier to make this case, and for the government to recognise it. That now may become harder. Tying energy to jobs, skills and growth (particularly in the right, electorally important areas) is still the clearest route to securing government backing, particularly from the Treasury. It will be incumbent on industry to make this compelling argument even more effectively, bringing data and human stories to the fore to show why government needs to quickly push the right policy levers that support industry.

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