Reforms to planning and grid connections, extensions to oil and gas windfall taxes and efforts to catalyse the green industries of the future all feature in the Spring Budget.
Setting the scene, the government signalled its intention to continue investing infrastructure, pledging to deliver over £600bn of planned public sector investment over the next five years that will underpin future growth and support energy security, net zero and public services.
This included announcing the final parameters for the next Contracts for Difference Allocation Round, through which the government says it has set “the largest ever budget for a single round” at more than £1bn. This includes £800mn for offshore wind.
The Budget also saw increased funding for the Green Industries Growth Accelerator (GIGA), as well as sector funding splits coming with that announcement. An additional £120mn is to be devoted to the budget, intended to further support an expansion of low carbon manufacturing supply chains across the UK.
This now lifts the total GIGA budget to £1.1bn, with £390mn targeted at the electricity networks and offshore wind sectors, along with £390mn being earmarked for the carbon capture, utilisation and storage and hydrogen sectors.
Further efforts to catalyse green industries include reaching a £160mn agreement with Hitachi to pursue a Wylfa site in Yns Môn and the Oldbury-on-Severn site in South Gloucestershire to play a big role in the UK’s nuclear future, six companies being invited to move to the next stage of the Small Modular Reactor competitive process, and plans to regulate providers of Environmental, Social and Governance ratings to users in the UK.
Reforming the UK’s planning system and speeding up grid connection times was also cited as a big part of the government’s growth agenda, with a consultation published on the proposed design of a new accelerated planning service, as well as new measures that would constrain the use of extension of time agreements and identify local authorities that are using these “excessively”.
Elsewhere, the government is pledging to implement a new stringent connections process from January 2025, while working with the Electricity System Operator to outline further interim reforms to the grid queue process by the summer of 2024. The National Energy System Operator will be in place by 2024. New community benefits guidance should also be published by June.
Targeted funding has been committed for consultations and calls for evidence to accelerate schemes in energy and transport, as part of efforts to accelerate smart data schemes in both, while the government is extending the Growth Duty to Ofwat, Ofcom and Ofgem. It is also pledging to publish a Regulator Performance Framework in the “coming months” that will encourage greater regulator agility, efficiency and responsiveness.
Finally, the government announced the Energy Profits Levy will be extended to the end of March 2029, with gas prices forecast to remain “abnormally high” until at least that date. Legislation is being brought forwards too to provide certainty that the Energy Profits Levy will end should oil and gas prices fall below levels set by the Energy Security Investment Mechanism before that date.
