The government has published its Autumn Statement, centred around building a “stronger and more resilient economy” with a number of announcements relevant for the energy sector.
It features the previously announced £4.5bn funding package for strategic manufacturing sectors, including clean energy – covered here – while also making full expensing, previously introduced for an initial three years in the Spring Budget earlier this year, permanent. Through this, companies will be able to write off investments in qualifying plant and machinery for the first year for main rate assets, with a 50% first-year allowance for special rate assets. The idea is to support businesses in their efforts to invest and to grow.
Full expensing applies across the economy, including to the UK’s green industries. The likes of solar and offshore wind will also be able to benefit from a new investment exemption that is being introduced through the Electricity Generator Levy. This will see any projects where the decision to proceed is made on or after 22 November 2023 exempt from the Levy going forwards, with the Levy itself set to end on 31 March 2028.
Turning to how the government is pledging to remove barriers to investment and supporting infrastructure, it cited tackling the UK’s outdated planning system and the time it takes to connect to the electricity grid as the key challenges.
It will deliver reforms to the Nationally Significant Infrastructure Project regime, seeking to return it to the two-and half-year average consenting time last achieved in 2012, as recommended by the National Infrastructure Commission. Ambitions here include publishing spatial data on major infrastructure projects for the first time and ensuring a more reliable process for updating National Policy Statements.
To create more certainty for those investing in low carbon infrastructure, it will extend the critical national priority designation for nationally significant low carbon energy projects. It will look to remove unnecessary planning constraints through accelerating the expansion of electric vehicle (EV) charging infrastructure and consult on amending the National Planning Policy Framework in a bid to ensure the planning system can prioritise the rollout of EV chargepoints, including EV charging hubs. The prospect of introducing new permitted development rights for heat pumps will also feature in a consultation to e launched, looking at ending a blanket restriction on having them a metre from a property boundary in England.
When it comes to speeding up electricity grid connection times, reforms to the process could see up to 100GW of capacity freed up, allowing projects to connect sooner. A “significant majority” of projects should be able to get their requested connection date with no wait because of this. Viable projects, meanwhile, should see overall connection delays cut down from five years to no more than six months.
An Action Plan will be set out to halve the time it takes to build new grid infrastructure to seven years, featuring elements such as new proposals for community benefits with up to £10,000 off electricity bills; a commitment to commission the Electricity System Operator to work with the government to produce a new Strategic Spatial Energy Plan; and the introduction of competition into the onshore electricity networks from 2024 which should benefit consumers.
The government is also building an action plan with Ofgem to reduce the amount of time it takes for viable projects to connect to the grid and has commissioned the National Infrastructure Commission to undertake a study on making the electricity distribution networks fit for net zero.
Honing in on investing in energy security and net zero, further details on growing hydrogen and carbon capture, usage and storage deployment will be published shortly, while legislation will be brought forward to provide the Crown Estate with borrowing and wider investment powers. Through this, the government expects it should help to unlock a further 20-30GW of new offshore wind seabed rights by 2030.
A new six-year Climate Change Agreement Scheme will see participants that meet agreed energy efficiency or decarbonisation targets between 2025 and 2030 entitled to reduced rates under the Climate Change Levy from 1 July 2027 until 31 March 2033. The new scheme is also set to be open to applications from new sectors that meet energy intensity and import penetration criteria. It will require more regular reporting of energy and throughput data too.
The government has also published conclusions to a review of the long-term oil and gas fiscal regime, including setting out principles for the tax treatment of future oil and gas price shocks once the Energy Profits Levy ends in March 2028, and targeted support for the energy transition by allowing relief for payments made by oil and gas companies into decommissioning funds where assets are repurposed for use in carbon capture, usage and storage.
