Energy at heart of UK post-Brexit industrial strategy

Affordable energy and commercialising energy innovation are focus of post-Brexit energy industrial strategy.
Published: Tue 31 Jan 2017

While the UK’s ‘Brexit’ process is bogged down in legal interventions, the government is rightly now looking ahead to its future outside the European Union (EU) with a proposed new Industrial Strategy.

In the foreword, Prime Minister Theresa May writes grandly of her Plan for Britain as “not just a plan to leave the EU, but a plan to shape a new future for the kind of country we will be when we have left. It is a plan to build a stronger, fairer Britain that works for everyone, not just the privileged few. It is a plan for a nation that stands tall in the world and is set up to succeed in the long term.”

With energy fundamental - and at government level now part a combined department with Business and Industrial Strategy - it inevitably features prominently in the strategy.

But given the objective of the strategy “…to improve living standards and economic growth by increasing productivity and driving growth across the whole country,” how do the proposals for the energy sector shape up? If comments from the industry are anything to go by – and which Engerati endorses – they are on the mark.

The energy opportunity

The energy section is prefaced with comment on recent commitments to improve security of supply and commitments to meet existing climate targets and to set out in an Emissions Reduction Plan on how further such legal obligations will be met. With these in hand, two “important areas” of energy policy are identified as requiring a higher priority: the affordability of energy for households and businesses, and securing the industrial opportunities of energy innovation for the national economy.

The three challenges to be met are the shift to a low carbon economy at least cost to businesses and consumers, the management of the changes to the networks in this transition, and how to capitalise on current industry strengths in global markets.

On affordable energy, the government promises to set out later in the year a long-term roadmap to minimise energy costs for businesses, while more generally the proposal is to move away from subsidies and other forms of state support to a competitive market delivery model.

Regarding the energy infrastructure, the smart meter programme is acknowledged, as is a Smart Systems call for evidence currently underway, which, later in the year, should report on the further steps required to take advantage of the opportunities for a more responsive network. Current work on electric vehicles (EVs) and on hydrogen technologies is also noted.

Examples of opportunities for British expertise are the nuclear sector, both in decommissioning and building and potentially also small modular reactors, and renewable technologies, in particular offshore wind. The government also commits to a programme of research and innovation in energy storage and other smart technologies, as a complement to existing work on for example EVs and smart metering, and to review the case for a new research institution to act as a focal point for this work.

Energy industry support

While the proposals are now subject to consultation, initial industry reaction has been widespread and supportive.

“We welcome government’s Industrial Strategy particularly the focus on battery technology and electric vehicles,” said Lawrence Slade, Chief Executive of the trade association Energy UK. “However, it’s critical the government acts swiftly to provide the long-term framework necessary to secure investment to build our low carbon future.”

Energy Networks Association Chief Executive David Smith said: “Our energy networks are the cornerstone of the UK economy as well as providing high quality jobs and apprenticeships across all regions of the UK.

“Continued support for innovation across the gas and electricity networks will enable the sector to establish itself as a world leader in the increasingly important global market for smart networks.”

RenewableUK’s Executive Director Emma Pinchbeck said: “The Prime Minster has taken a bold step by focusing specifically on innovative new industries where the UK is leading the world, and which are challenging the old order. That’s exactly what our wind, wave and tidal energy industries are doing by delivering affordable energy and clean growth.”

Jenny Hogan, Director of Policy at Scottish Renewables, said: “It’s encouraging that the huge opportunities presented by offshore wind, energy storage and smart grids are recognised in the strategy… The renewables industry is focused on meeting UK climate targets at the lowest cost to the consumer, and we look forward to working with the Government to help implement its new strategy.”

Scottish renewables

A day after the release of the Industrial Strategy green paper, the anti-Brexit Scottish government released its draft energy strategy.

Introducing a proposed target of delivering 50% of the energy required for Scotland’s heat, transport and electricity needs from renewable sources by 2030, this strategy draws on some of the same constructs to seek to deliver a modern, clean and affordable energy system. These include the significant local expertise in renewables – Scotland is home to the Offshore Renewable Energy Catapult, for example – as well as expertise in oil and gas, which is also finding expression in the potential long term use of decommissioned platforms.

Some of the elements of the strategy include a long-term building energy efficiency programme, support for carbon capture and storage (CCS) and a focus on local/community energy initiatives.

“It is now more important than ever that the Scottish government sets its own vision for energy, with clear priorities and ambitions for future energy provision,” states the draft strategy, in reference to UK government decisions that “have undermined the hitherto stable investment climate for energy strategies”.

Quoted among these is removal of support for carbon capture and storage development and for key renewable technologies.

The Scottish government intends to assess the latest position on these issues in the final energy strategy later in the year.