{"id":60961,"date":"2024-11-05T18:02:38","date_gmt":"2024-11-05T18:02:38","guid":{"rendered":"https:\/\/grayling.com\/?p=60961"},"modified":"2024-11-08T22:11:43","modified_gmt":"2024-11-08T22:11:43","slug":"is-a-big-state-necessary-to-deliver-the-uks-energy-system","status":"publish","type":"post","link":"https:\/\/grayling.com\/es\/news-and-views\/is-a-big-state-necessary-to-deliver-the-uks-energy-system\/","title":{"rendered":"Is a \u2018Big State\u2019 necessary to deliver the UK\u2019s energy transition?"},"content":{"rendered":"
Keeping up with the expansion<\/strong><\/h5>\n

When solving problems, humans seem to have systematic bias in favour of addition<\/a> rather than subtraction. Nowhere is this more apparent than the propensity to expand the size of government in response to challenges \u2013 last week\u2019s Budget saw \u00a336bn in tax rises, with \u00a332bn in additional borrowing<\/a>, which will likely push national debt above 100% of GDP<\/a>. Identifying precisely how these eye-watering sums are spent is a challenge; an easy rule of thumb is one of scope \u2013 what does government do now that it previously did not? A recent example is the previous government\u2019s decision to nationalise the National Energy System Operator<\/a>.<\/p>\n

According to HM Government, the decision will fill a gap in the energy system whereby \u201cno single body [is] responsible for overseeing the strategic planning and design of the country\u2019s electricity and gas networks.\u201d\u00a0 <\/em>Laudable, but have the benefits and drawbacks of state planning on this scale been thoroughly debated?<\/p>\n

To what extent does anyone fully understand the plethora of reports, bodies and action plans to help HM Government lower energy bills, improve energy security and deliver net zero targets? An incomplete list of policies would include the Clean Power 2030 Action Plan<\/a> (CP2030), the Strategic Spatial Energy Plan<\/a> (SSEP),\u00a0Centralised Strategic Network Plan<\/a> (CSNP), and the\u00a0Connections Action Plan<\/a> (CAP), as well as the\u00a0Holistic Network Design<\/a> (HND).\u00a0<\/span><\/span>In addition, HM Government has established various agencies, such as GB Energy<\/a>, Mission Control<\/a>, National Wealth Fund<\/a>, and has longstanding programmes, such as the Review of Electricity Market Arrangements<\/a> (REMA).<\/p>\n

Several valiant attempts have been made to graphically demonstrate how these policy documents and bodies interact with each other \u2013 albeit not by HM Government \u2013 but keeping up with this proves challenging for most. Who is equipped to both understand and navigate the interactions between these schemes? Which policy has precedence over the other? There are few that understand this in totality, including within government departments we understand, which limits public debate on the significant expansion of the state\u2019s role in planning the UK\u2019s energy system.<\/p>\n

Whilst Labour have played a part in expanding state infrastructure<\/a>, the Conservatives kicked off the move towards a more centrally planned energy system by picking specific technologies to support, such as ambitious offshore wind and CCS targets, which the Winser Review was commissioned<\/a> to consider how the infrastructure required to meet these target could be delivered. The creation of an overarching plan (the SSEP) was confirmed in HM Government\u2019s response to Winser (a.k.a., Transmission Acceleration Action Plan<\/a>), which signalled a move away from a first-come-first serve model to a more centralised plan.<\/p>\n

Analysing effectiveness of a bigger state<\/strong><\/h5>\n

This is a similar path developed by The<\/a> Netherlands, who, up until 2013, made developers responsible \u201cfor site selection and investigation, permitting process and grid connection;\u201d <\/em>thereafter, the government assumed responsibility for \u201cregulating conditions for the construction – i.e. exact location, a long-term tender schedule, clear consenting procedures and\u2026for offshore grid connections\u201d.<\/em><\/p>\n

Similar to the pre-2013 Dutch model, the UK\u2019s energy system has operated a developer-led model with the Contracts for Difference providing attractive subsidies to encourage investment within that framework. This model has seen the UK\u2019s carbon emissions drop by 52% since 1990<\/a> and wind energy generation soar from 13,000 GWh in 2010 to 80,000 GWh in 2023<\/a>.<\/p>\n

This impressive wind record is second only in Europe to Germany, which produced 142,000 GWhs in 2023<\/a>. Indeed, the German model has been praised by developers for removing barriers to investment, including cutting \u201cthe number of environmental assessments\u2026and [simplifying] the grid-planning process.\u201d<\/em><\/a> By comparison,\u00a0The Netherlands lags behind these impressive figures having generated only\u00a0<\/i>28,900 GWh of wind energy in 2023<\/i><\/a><\/span><\/span><\/em>. However, despite some praise and earlier successes in building significant capacity, the German Energiewende<\/em> has become \u201cnotably lethargic\u201d<\/a> and bureaucratic<\/a>, arguably in part to its planned approach. This has been notable in challenges the Germany economy has experienced in moving away from Russian-imported gas and phasing out nuclear. By \u2018picking winners\u2019 via centrally directed plan, Germany was less agile that it could have been in response to external pressures.<\/p>\n

So, why is the UK progressing towards a German or Dutch type model that either limits room for maneuverer or has not maximised delivery of wind generation (a British specialism)? Naturally, these systems are complex and cannot be so easily characterised, but such a debate is needed to ascertain if the UK is happy to embrace greater state involvement in planning our energy system.<\/p>\n

SSEP to become \u2018King Acronym\u2019<\/strong><\/h5>\n

Based on current projections, demand for electricity is expected to increase 50% by 2035 and double by 2050<\/a>. HM Government is understandably anxious to balance this increase with energy security, whilst meeting its net zero targets. The SSEP<\/a> has been trailed as the strategy to address this challenge by creating a \u2018King Acronym\u2019 that rules above all others. We are told it will \u201cassess the optimal locations, quantities and types of energy infrastructure required, across a range of plausible futures, to meet future energy demand with the clean, affordable and secure supply that we need [and consider] public views, environmental considerations and cross-sectoral demands.\u201d<\/em><\/a> For those with experience of the Town & Country Planning Act, the SSEP sounds oddly similar to a Local Plan, albeit on a national scale.<\/p>\n

In the British, Scottish and Welsh energy ministers\u2019 commission letter to the new National Energy System Operator (NESO), they stated the SSEP would guide both the \u201cindustry and the public\u2026by providing the foundation for holistic, cost-effective system planning; facilitating early engagement with the supply chain; and setting out a clearer position with respect to planning processes across GB.\u201d<\/em><\/a>\u00a0 <\/em>This should create a more efficient grid connection process because projects allocated in SSEP, having gone through the rigor of achieving an allocation, would be prioritised over other projects. Since delays in securing grid connections is a key critique of the current system, this could be a significant step forward.<\/p>\n

The Winser Review suggested the SSEP should have a 25-year horizon and is refreshed every five years<\/a>, which would ensure the latest technologies and approaches are included. This should give certainty to local communities on what infrastructure to expect and when. There have been extensive criticisms of the current developer-led system, including in Suffolk where the approach was described as \u201cuncoordinated\u2026relentless\u2026and\u2026unfair\u201d<\/em>.<\/em> Developer-led systems are arguably less ordered as developers compete against one another to achieve connections and consents as efficiently as possible.<\/p>\n

The theory is for a peaceful and harmonious system, which is underpinned by a state that centrally plans capacity building across several sectors at the pace required by government targets. You would be forgiven for thinking you have heard this one before; state planning has potential benefits, of course, but it also has serious challenges, which should be fully scrutinised and debated.<\/p>\n

Weighing up the trade offs<\/strong><\/h5>\n

The most obvious drawback is government\u2019s lack of dynamism that often generates overlapping publications, short-termism, U-turns and contradictory decisions. For example, the CAP<\/a> and resulting connections reform (a.k.a. TMO4+<\/a>) are due to be implemented in early 2025 but the SSEP is scheduled for 2026. Although the SSEP will cover the period beyond 2030, in April 2024<\/a>, the NESO said \u2013 in reference to TMO4 \u2013 \u201cone avenue for consideration is the [connection] criteria for technology and location, to align\u2026with the forthcoming SSEP\u201d <\/em>\u2013 suggesting alignment with the SSEP was not a given. Similarly, HM Government\u2019s recently published CP2030<\/a> plan states that \u201cthe next step (to the CP2030) will be for the Government\u2026to set out is own plan for clean power\u2026we (NESO) will use the Government\u2019s plan as the starting point for the SSEP.\u201d<\/em>\u00a0 This adds another layer of complexity that makes aligning the CP2030<\/a> (plus bonus government plan), SSEP<\/a>, CSNP<\/a> and CAP<\/a> an increasingly onerous task with plenty of risk for being knocked off course.<\/p>\n

There are also considerations to be made regarding the impact of potential zonal pricing reforms outlined in the REMA programme. One could argue that if HM Government struggles to align the publication of strategies, then it could equally be unable to respond swiftly to new technologies coming online; instead, becoming bogged down in the local political fights over where projects are allocated.<\/p>\n

Supposedly the SSEP should become \u2018King Acronym\u2019 but the CSNP, CAP and CP2030 are set to make decisions before then, so will they be reconsidered or retconned into the SSEP? State planning should simplify seemingly \u00abuncoordinated\u201d <\/em>market-led approaches, but the present system does not provide reassurance that this can be achieved via a new document. The National Infrastructure Commission (NIC) estimates there is already a backlog of over 600 projects<\/a> creating delays of six to eight years. The conflicting timelines will likely lead to a disconnect between projects in the connections queue and exacerbate connection competition in regions with high allocations in the SSEP.<\/p>\n

Furthermore, there remains some confusion as to how shifting developer competition from the grid connection stage to the SSEP allocation stage will reduce pressure and possible delays. Arguably, HM Government\u2019s constrained resources will limit effective review of every SSEP application, which could delay allocations and by extension the initial publication or future refreshes. In this context, the argument could be made that rather than HM Government trying to plan the UK system from Whitehall, they should focus on liberalising planning, simplifying grid connections, expanding connection assessment capabilities and incentivise developers within a market-led system.<\/p>\n

Greater transparency and debate<\/strong><\/h5>\n

Regardless of whether you think market-led or state-led is preferable, there should be meaningful discussion about the trade-offs of greater state planning of our energy system. The goal of a state-led system is to simplify energy policy by creating certainty and alignment with developers, transmission providers and policy makers. At present we have acronyms on top of acronyms, and plans on top of plans, which stifle public debate.<\/p>\n

It could be argued that if this convoluted approach is successful, then does it matter how they achieve their aims? However, if it is not, therein lurks the political threat of net zero targets being challenged. The CP2030 Plan \u2013 due for publication later this year – provides an opportunity to improve transparency. HM Government may argue that the state control over energy system planning is necessary for the UK to achieve net zero targets \u2013 if so, then that argument should be clarified to enable a more easily-accessible discussion.<\/p>\n

Until clear debate is had, HM Government is storing up political and market challenges that could unravel the consensus around net zero targets. For those of us that believe in the energy transition, this is a pressing topic that needs greater exposure.<\/p>\n

Grayling\u2019s Planning & Infrastructure<\/a> team is committed to supporting UK\u2019s energy transition, major economic development projects and infrastructure delivery. Grayling offers comprehensive communications and engagement support to clients working in the energy and the built environment sectors. To find out how our team can help you, please contact ross.mcwilliams@grayling.com<\/a> or planning&infrastructure@grayling.com<\/a>.<\/p>\n

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 <\/p>\n","protected":false},"excerpt":{"rendered":"Keeping up with the expansion When solving problems, humans seem to have systematic bias in favour of addition rather than subtraction. Nowhere is this more apparent than the propensity to expand the size of government in response to challenges \u2013 last week\u2019s Budget saw \u00a336bn in tax rises, with \u00a332bn in additional borrowing, which will…","protected":false},"author":5,"featured_media":60962,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[669,673],"tags":[679],"class_list":["post-60961","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk-news","category-views-blogs","tag-planning-infrastructure"],"acf":[],"yoast_head":"\nIs a \u2018Big State\u2019 necessary to deliver the UK\u2019s energy transition? - Grayling<\/title>\n<meta name=\"description\" content=\"Examining the UK's shift toward a centrally planned energy system, this blog explores the implications of increased government involvement...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/grayling.com\/es\/news-and-views\/is-a-big-state-necessary-to-deliver-the-uks-energy-system\/\" \/>\n<meta property=\"og:locale\" content=\"es_ES\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Is a \u2018Big State\u2019 necessary to deliver the UK\u2019s energy transition? 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