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Impact of the New Government on the Energy Industry

The results are in…

Labour is our new government, so what does this mean for the energy industry? Here are our thoughts on the results from the general election.

In their manifesto Labour placed strong emphasis on environmental sustainability, public ownership, rapid decarbonisation and energy efficiency.

They aim to create a sustainable, equitable and publicly accountable energy system aimed at addressing the climate crisis and ensuring affordable energy for all. Certainly, the industry needs a bold change to keep up with what the new energy economy needs.

Labour’s focus – one word, change…

The energy industry is famously driving delivery of the energy transition and Net Zero for 2050, but its being held back by delays to grid connections and regulatory and market models that aren’t fit for purpose in today’s world.

With the new government in place, their policy for GB Energy needs to address these issues to stimulate innovation and growth.

The Labour manifesto focussed on several areas, such as:

  • Accelerating renewable energy projects through increased investment and streamlined planning approvals.
  • Modernising the grid with a focus on public ownership and increased investment in grid infrastructure.
  • A focus on energy efficiency by investing in smart grid technology
  • Enhanced collaboration with OFGEM to reform grid connection policies and processes.
  • Creating green jobs by offering new opportunities within the energy sector.

What does the energy industry need in its current state?

We caught up with Spencer Thompson, CEO of Eclipse Power, for a deeper dive into the challenges the industry is facing.

Spencer Thompson

Key areas include the need for allowing more competition in Transmission to help remove bottlenecks, unleash innovation and in turn lead to essential changes to the regulatory and market frameworks to enable future customer developments. The industry is currently blessed with significant private investment, and we must ensure we can deliver as an industry.

The industry requires reform, collaborative leadership, new capital and resources to achieve Net Zero and stimulate economic growth and a grid fit for 2050. The connections process has made positive steps we should build on this with more game changing reformation to accelerate clean energy projects. We currently have housing developments held up by major transmission infrastructure works, this cannot be right for our industry.

Expanding the renewable energy sector and enhancing its integration with the grid will lead to the creation of numerous jobs in innovative areas like digital technologies and artificial intelligence (AI). Digitalisation is the key to unlocking the grid. This expansion will also enhance flexibility and aggregation markets, resulting in lower energy costs for consumers by utilising behind-the-meter solutions and increasing renewable energy and storage capacity. If we can optimise the process, we can optimise the product.

How will an upgrade to the planning and regulatory framework help?

Planning comes with significant risk that delays and brings many projects to a halt.

INA note that “On average it takes projects five years to be connected to the grid. The size of the grid connection queue is expected to rise by 300GW by the end of 2024”.

If we can streamline this process, the roadmap to effective energy infrastructure and grid connections will be far more efficient. A more facilitating regulatory model will help overcome the connection queue, increase competition and therefore innovation when it is most needed in the industry.

How important is digitalisation?

A major barrier to overcome is the connections queue, which is approaching Terawatt territory. The tech available to us needs to be utilised. Digitalising how we optimise the grid will help us challenge our industry standards and quicken the process to unlock renewables and large demand customers like Data Centres.

What do we hope to see from the new government?

While the initial surge in renewable energy projects under Labour could increase the grid connection queue temporarily, their policies aimed at grid modernisation, new ownership models (should not necessarily be government owned though), decentralised energy and regulatory reform could alleviate these pressures over time and reduce the backlog.

We need bold changes. We welcome the GB Energy thinking and hope it will streamline the regulatory framework and establish more supportive markets, encouraging investors to enhance energy transmission infrastructure and adopt new technologies. Zero bills to consumers are possible in todays world if we get the new model right.

As we reach towards our 2050 targets, the energy industry has already made great leaps and we hope that the new government will keep us moving forward on that path.

“It’s going to be an exciting sector to be involved in for the next ten to twenty years, and beyond.” – Spencer Thompson, CEO.

As an IDNO, private network, microgrid and Grid Consultancy, Eclipse Power is right at the heart of the energy transition. We are dedicated to providing innovative energy solutions, supporting the transition to a sustainable and resilient energy future.

Talk to Eclipse Power. Electricity Connections. Simplified.