We now have a new Labour Government, a new Chancellor, Rachel Reeves, and a new Energy Secretary, Ed Miliband. There have already been significant announcements and changes to the planning system and ‘change’ is also an apt name for Labour’s Manifesto when talking about the energy sector.
Our
colleagues have provided their thoughts on the new ambitions for planning and housing in the recognition that the planning system provides a key lever to drive economic growth. This blog looks at Labour’s key commitments for renewable energy and it considers how these may manifest themselves into the planning system and, when applied, what implications and opportunities they present for our sector and our clients. We have already seen some come to fruition.
The Labour Manifesto commits to making “Britain a Clean Energy Superpower” to cut bills, create jobs and deliver security with cheaper, zero carbon electricity by 2030, accelerating to net zero. The definition of a ‘Superpower’ is an ‘exceptional or extraordinary power or ability’. Many reading this may think that a superpower is exactly what is needed to achieve the targets the Manifesto suggests, and the early signs are promising.
We are really enthused by Labour’s energy commitments, and this could be a turning point if we act fast. We know industry players have the knowledge and the expertise to harness this significant opportunity and it needs a coordinated approach to move the sector forward.
Key Commitments
To achieve the 2030 mission, Labour propose to:
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Triple onshore solar to 50GW
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Double onshore wind to 35GW
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Quadruple the development of offshore wind with an ambition of 55GW by 2030
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Invest in carbon capture and storage, hydrogen, and long-term energy storage to ensure that there is sufficient zero-emissions back up power
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Double the target on green hydrogen, with 10GW of production for use particularly in flexible power generation and storage
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Construct new nuclear plants (such as Sizewell C) and small nuclear reactors
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Extend the lifetime of our existing nuclear plants, including getting ‘Hinkley Point C over the line’. Labour identify that these play an important role in helping the UK achieve energy security
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Labour will maintain a strategic reserve of gas production in the North Sea and will help with the transition period for this industry in recognising its historical importance and its ability to help guarantee security of energy supply. They pledge to phase out the use of gas and power more generally, including not to revoke or issue new oil and gas licences to explore new fields.
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Not to grant new coal licences and ban fracking for good
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Labour propose the following mechanisms to secure the above commitments:
Harnessing the opportunity and accelerating growth?
For those of us who work in the renewable energy sector, the change in Government is probably an exciting time. Can a new Government bring forward enough change and quickly? Our discussions show an appetite and enthusiasm in the sector and we wait to see how this plays out in the planning sector and commercially with our clients.
In the first year, Labour propose to:
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Form GB Energy.
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Lift the ban on onshore wind (in fact this happened
yesterday).
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Reform the planning system by updating National Policy Statements and for Nationally Significant Infrastructure Project’s (‘NSIPs’ - yesterday’s announcement commits to this)
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Role out a plan to ‘Rewire Britain’.
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Approve the next round of renewable energy projects in Contracts of Difference auctioning.
A state-owned investment vehicle like GB Energy is not new, in fact other European countries already follow similar models. According to the Labour Manifesto, GB Energy will be able to derisk new technologies by providing funding, thereby helping to speed up and scale up development. It is set to provide financial and organisational support to local governments through a Local Plan Power. This will also work alongside communities. An example where the sort of investment and collaboration is already working includes at a wind farm in Scotland which is 7% owed by the community in partnership with the developer with a share of profits being driven back into the community.
We have previously
commented on matters related to investment, stakeholders, local planning and community support and we agree that the above would be a positive mechanism to bring forward new projects. We have seen minor changes in recent years but none that would materially allow the above project example to come forward or projects of any great commercial scale. This leads us nicely onto the planning system.
Labour recognise that the planning system is a key barrier to development. The Government commit to:
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Ensuring communities benefit from the clean energy they host.
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Reducing the time projects take in the planning system from years to months.
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Ensuring that regulators are aligned and ending the duplication of bureaucracy.
Following announcements yesterday, we are more certain that a revised draft of the National Planning Policy Framework (‘NPPF’) will be published in the coming weeks and before parliamentary recess (now expected end of July). There will be a lot to cover in this (not just for energy) and in our view there needs to be much greater and positive emphasis to all energy sources (including solar, wind, carbon capture, battery storage, wind and hydrogen). This would be the start of a joined up regulatory framework to sit alongside National Policy Statements and commercial mechanisms for investment.
We agree with the current wording of paragraph 163 of the NPPF (a) insofar as it does not require applicants to demonstrate the overall need for renewable or low carbon energy. This need is now surely a given?
Rachel Reeves has already announced major changes to onshore wind and has confirmed that the ‘de facto’ ban on this form of development has been lifted and the existing policy tests no longer apply. She has also confirmed that the renewable energy update will go further. Labour propose to consult on bringing large onshore proposals into the NSIP regime, amongst the above bullet pointed measures. In her first speech on Monday, Rachel Reeves also recognised the importance communities will play in decisions and that they should benefit from hosting such projects. An updated Community Benefits Protocol for onshore wind is expected.
At present the NPPF places emphasis on decisions having “community support”. If a similar planning ‘hook’ or community focus is proposed, will it simply be for onshore wind or will it extend to other renewable energy projects? What will this mean and how can due process be agreed at a local authority level? Is more emphasise therefore placed on pre-application discussions or will there be a separate mechanism through GB Energy or the above-mentioned protocol? We have commented before on how community support plays out in the planning system and how this could be measured or secured in the planning balance of a decision. Would it result in a Section 106 obligation or CIL payment and change to local CIL 123 lists?
On a wider scale, the planning system should plan for a coordinated approach to housing, employment, transport and energy developments and in doing so we suggest an appropriate mechanism would be to promote sites for allocation based on a list of locational requirements (i.e., grid connection), development characteristics and an understanding of environmental designations. We are aware of the scale of this task and the need to embed it into the local plans process, a task which comes with many a timescale implication. Do the proposed New Town proposals or the promise to unlock poor quality Green Belt (the ‘grey belt’) offer an opportunity?
It is evident in our view that however great the support for renewable energy at a national level, there is a need for a local focus and therefore more education and guidance for all stakeholders, including the community.
Rewire Britain
A second key barrier to development in our view is the capacity of the National Grid. Labour too recognise this and plan to ‘Rewire Britain’. At present we are aware of a significant transmission backlog and developers being offered a connection date in 15 years time. This is resulting in planning permissions expiring and developers unable to commit to longer term projects.
The UK’s Electricity System Operator (‘ESO’) has proposed a ‘first ready, first connected’ approach to the existing grid queue. This is welcomed and we understand that certain criteria will need to be met before a capacity queue position is allocated (i.e., secured land rights and dates for submitting and securing planning).
Labour’s message is that we not only need to focus on the existing queue, but the future greater emphasis on electricity for power means that the network needs to be greatly expanded. Labour plan to facilitate the largest upgrade to our infrastructure by:
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Planning our energy system strategically to look ahead to unlock the investment we need.
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Empower a Future Systems Operator (‘FSO’), taking the role as a ‘systems architect’ regarding electricity, gas, and the changing nature of demand. The FSO would work with regional operators and local governments to develop local plans that link infrastructure, to projects and communities.
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Ensure that the planning system is reformed and that communities can benefit from hosting grid infrastructure.
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Build and use energy systems in a smarter way.
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Dismantle the grid queue.
Those involved in discussions have commented on those ways in which our grid can be developed and Lichfields will be monitoring Government announcements as they progress. As a starting point it is recognised that direct Government intervention and investment is required. Can renewable energy be integrated into a much larger power grid? Is there a role for grid level storage and large batteries? We expect there will also be the case for short term and seasonable flexibility. What about more public visibility of grid capacity? Those involved in the ‘tech’ debate have also posed the question on the role of data centres in monitoring and forecasting supply and demand for grid capacity and understanding geographical areas of ‘congestion’ and ‘reserves’. In addition, what if a much more local approach could be taken to promote the use of energy in households when supply is high but demand is low so that if a household uses energy a cost saving is passed to the consumer? This would help regulate the capacity at one given point in time. In speaking to our clients, it is key that grid connection is a priority and that major change is needed to bring forwards confidence to the market to allow projects to come forwards on a commercial scale.
A RENEWed Approach?
The UK’s energy sector could look very different. Labour has set out and is starting to implement its clear intentions for change and in our view, this is the time to do it and to plan for investment and policy support in the long term. Labour will need to make significant decisions and we need a clear and consistent direction to give confidence to the sector and our clients, whilst remaining flexible to allow us to adapt to future opportunities.
The sector and our clients are not shying away from the fact that it will be a huge task and that financial investment in the short term will be challenging, however the prospects it opens up for the future, our climate ambitions and economic growth are exciting.
Do get in touch with Lichfields if you would like to be involved in these discussions.
