Energy Security Strategy – Lacking Ambitious Opportunities for the West Midlands

The Energy Security Strategy was released at the beginning of April in the light of the war in Ukraine and its underlining of our reliance on volatile international markets for energy. One of SWM’s eight priorities as part of our Roadmap to 2030 is ‘sustainable energy use’ and, as such, we welcome the  Government’s focus on energy security, as it could provide opportunities for the energy and zero carbon sector. However, does the plan provide tangible support for zero carbon energy, and timely and meaningful support for energy bill payers, and does it indeed provide opportunities for the zero-carbon sector in the West Midlands? The strategy is supportive of nuclear energy, a controversial but certainly zero carbon fuel. It aims to have 25% of UK power derived from nuclear sources by 2050, from up to eight new reactors, with plans to take one nuclear project to final investment decision this Parliament, and two further projects in the next Parliament. Nuclear energy is to be supported by a £120m Future Nuclear Enabling fund (details for which will be announced later in the year), and changes to facilitate the development process. This is potentially positive for zero carbon energy independence – France, for example, produces about 70% of its electricity is from nuclear. However, nuclear power plants are notoriously costly and time-consuming to build.  Hinkley C is the only one of eight sites designated by Government in 2010 which has actually commenced construction 12 years later, and the National Audit Office has raised questions about its value for money for the tax payer. Nuclear provides few opportunities for the West Midlands; none of the designated sites are within the region due to the need for large bodies of water for cooling. The strategy has an ambition for 10GW of hydrogen, half of which is to be generated from low-carbon electrolysis. This will be supported by new funding annually (see here and here for two funds about to be released), new business models for hydrogen transport and storage, and a hydrogen certification scheme to be in place by 2025. This will be of interest to the nascent hydrogen sector in the West Midlands. Tyseley Energy Park has the largest hydrogen refuelling station in the UK and can refuel up to 40 buses a day, from electrolytic hydrogen produced on site. Meanwhile the HyDEX programme is working with universities, SMEs and larger Midlands and UK based commercial partners to develop the wider hydrogen industrial economy in the Midlands. The ambitions for hydrogen in the Strategy are welcomed to support the decarbonisation of energy across the West Midlands, but could go further to implement the regulatory framework to support or mandate the use of hydrogen that some in the sector are calling for. To find out more about the priorities for and opportunities around hydrogen in the region, join SWM, Midlands Engine, the Energy Research Accelerator and Cadent at our hydrogen briefing webinar on 10 May. Oil and gas play a key role in this strategy. Given that natural gas is lower carbon than coal, the Government sees no conflict between support for gas and its own net zero targets. Certainly gas will have a role to play as a transition fuel in the medium term, however the zero carbon sector may well baulk at the proposals to increase gas production from the North sea via new licensing rounds, and the suggestion that government is ‘open minded’ about shale gas. There are proposals for carbon capture usage and storage, but the strategy stops short of setting out binding targets and provides no new money to support this. It is certainly welcome to see a strong role for renewables in the strategy, supporting our Roadmap ambitions. The strategy intends to accelerate the success of the UK offshore wind sector by speeding up the process time and increasing cost effectiveness. Solar energy capacity is to rise from 14GW to 70GW by 2035; benefitting from changes to the planning system to favour development on non-protected land, to simplify installations on public sector rooftops, and to drive installation on new buildings. Government also plans to facilitate low-cost finance to further assist its deployment. This will be welcome in the West Midlands where there are many opportunities for efficient deployment. However onshore wind appears to be the poor relation. Unlike for solar energy, there are no proposals to introduce changes to the planning regulations to facilitate it. Currently wind can only go ahead if in an area identified in a local plan and if any concerns raised during consultation are not addressed; this has led to an effective halt in onshore wind installations since 2015. Given that the strategy recognises that onshore wind is one of the cheapest and easiest ways of improving the UK’s energy security, this is a huge missed opportunity. And so to the largest missed opportunity of the strategy – the approach to demand reduction.  Energy prices are hurting householders and businesses now, but this strategy offers little to help. It proposes a £150 council tax rebate here, a (repayable) £200 reduction in bills there, but its approach to energy efficiency almost celebrates leaving the householder and business to exercise their personal responsibility in their own time. There is to be a boiler upgrade scheme, zero-rate VAT on energy saving measures, energy advice for householders and small businesses and new energy performance standards. This is small fry in the face of the challenge. What is needed are ambitious, well-funded street-by-street energy retrofit schemes, of the style envisioned by early proponents of a Green New Deal; this was backed up by the findings of our recent workshops for local authorities on retrofit skills, run in partnership with the Local Government Association. The Government led Green Deal (launched in 2013) failed, but the opportunities it represented of reducing bills and fuel poverty, providing comfortable homes, of huge market opportunity, for job creation in skilled trades, for SMEs in the retrofit supply chain, and for generally providing a massive boon to the low carbon retrofit sector in the West Midlands, are still available for the taking. Energy retrofit is a massive market failure and needs strong government intervention to correct in such a way that we meet our zero carbon targets and reap the economic benefits. This strategy does not provide that intervention. There are other missed opportunities. There is no mention of community energy at all; a shame when in other countries (such as Denmark) this meets a significant proportion of energy needs, and represents an important way to democratise the energy system.  Community Energy England have long called for financial, technical and policy support for community energy, but for the most part this continues to fall on deaf ears. Also, an independent zero-carbon energy system requires considerable overhaul to the national grid. The strategy does mention the need to modernise the grid and anticipate demand and increase flexibility in matching demand to energy. However, there is no mention of storage or decarbonisation of heat networks, competencies that many West Midlands innovative companies have in abundance as demonstrated by our membership base. As such, projects in the West Midlands that address these will have difficulty scaling up nationally or fitting into this energy strategy. Overall, there are some opportunities in this Energy Security Strategy which the West Midlands could capitalise upon, but in the main it proposes expensive methods to secure the UK’s energy security in the medium to long term, with little to help struggling businesses and householders now. The huge environmental, economic and social opportunities provided by mass energy retrofit (perhaps supported by new community owned renewable energy generation) have once again been left to slip through our fingers. Dr Beck Collins – Senior Sustainability Advisor, on behalf of the SWM Team.