The partnership was announced by Mr Miliband on Thursday and is aimed as a way in which to accelerate the construction of thousands of offshore wind turbines in UK waters. This in turn will help to increase UK energy security while also providing cheap renewable power.
Some questions are being asked about whether the ambitious target of a decarbonised power system by 2030 is actually feasible, partly due to the delays for connection to the grid by new wind and solar farms, and also whether GB Energy is the most effective way of achieving this. In some circumstances, new projects can take up to ten years before they start generating power, after winning their lease initially. However, legislation is already being drawn up to establish GB Energy, to be based in Scotland, which will be able to draw upon £8 billion of taxpayer money to get schemes up and running.
The private sector has invested heavily in UK offshore wind thus far, supported by government guarantees on the price for electricity, giving the country the largest offshore wind capacity outside of China.
The news was broadly welcomed by the private sector, but with concerns that other vital renewable energy technologies might take a back seat to offshore wind.
“Hardware businesses need patient capital, which makes it difficult to secure traditional investment form fund managers looking for three-year exits” said Christophe Williams, CEO of Naked Energy. “The fact that the Government is willing to kickstart these projects makes it much easier to secure this investment. However, GB Energy must put heat decarbonisation as a priority next to grid decarbonisation - especially distributed heat decarbonisation frees up more grid capacity for green electricity. A positive step would be to re-introduce the Renewable Heat Incentive for commerce and industry, and make sure it stays in place. We should also introduce an advantage for local suppliers, much like the Inflation Reduction Act did in the US. Giving a 10 percent bonus on products designed or made in the UK would provide a huge boost for renewable energy. We have an opportunity to become world leaders in renewable energy, and it won’t require historical levels of funding. All we need is the Government to provide the support and clarity that will nudge us in the right direction. We have the innovation and the resources to take care of the rest.”
Carla Riddell, Chief Strategy Officer at Xodus said that the announcement is a positive step forward for the UK and that the country has, thus far, suffered from a lack of energy policy and fiscal stability, which has turned investors away.
“Without stability, we’re at risk of losing the people needed to deliver floating wind, CCUS and hydrogen projects if we don’t land the £100 billion of investment, yet to be approved, by the end of this decade” Ms Riddell added. “Contracts for Difference (CfDs) have been the bedrock of government support for the scale up of offshore wind, but lower revenue support on AR5 meant no projects bid for contracts. It showed that further CfD reform is needed and closer alignment between The Crown Estate and government through GB Energy should be a positive change. For us as a consultancy, stability helps us make wise decisions on where to upskill and deploy our people – we’re always looking at where we have the most confidence. Anything that facilitates better collaboration would be welcomed but crucial to GB Energy’s success will be listening and working with industry.”
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