The voice of the energy industry

The 2019 General Election and what it could mean for the future of energy

There was much discussion about what the impact would be of a December election. How would the public feel about heading to the polling station on a cold and rainy Thursday? How would the local party faithful feel about knocking on doors after dark? And would it mean school nativity plays are cancelled up and down the country? But there might be one silver lining, as highlighted by National Energy Actions CEO, Adam Scorer, at our recent Breakfast Briefing on energy efficiency – that for once perspective future Members of Parliament would be getting an insight into what fuel poverty, and living in cold homes means for many of the population as they went around asking for our votes.

Towards a secure and sustainable low-cost energy future

This General Election maybe being viewed as a ‘Brexit Election’ but I doubt any of us 2 years ago could have predicted that climate change, the environment and net-zero would have been a top priority for the electorate behind Brexit, health and crime.

A week before the election officially kicked off, Energy UK published its own industry manifesto ‘Towards a secure and sustainable low-cost energy future’. The industry manifesto calls for actions on 4 priorities for the next Government in meeting net-zero at the lowest cost to customers.

  • Increase low carbon generation
  • Decarbonise our homes, businesses and transport
  • Boost energy efficiency; and
  • Ensure a fair transition

The strength of this manifesto was that it looked across the whole of the energy industry and joined up policies that would be a win for achieving net-zero and for customers. For example, calling for increased investment in low-carbon technology (such as onshore wind) and the knock-on benefit that that would have on keeping the cost down for customers.

We also highlighted the essential role that private investment has played in the UK becoming a world leader in decarbonising our economy and power sector.

Net-zero a priority

We now have all the major parties’ manifestos, and as I read each one, I got more encouraged by their focus on net-zero. Delivering a net-zero carbon economy is a priority for all major political parties and this means without doubt, whoever wins the election they will have a mandate to deliver an improved environment, and to tackle climate change. The other thing I was struck by was that all the parties had the same outcome, with the same broad ideas of policies (energy efficiency, increase in renewables, and benefit from electric vehicles (EVS)). Often the only thing that divided them was the journey to get there, the level of ambition, and the amount of spending. 

Energy Efficiency, tightening building standards and decarbonising heating

Energy efficiency was a key theme in all the manifestos- at last energy efficiency is being seen as a vote winner! Whether it was Labour’s plans for investing in improving the energy efficiency of millions of existing homes, the Conservative’s plan to invest £9.2bn to improve the energy efficiency of our homes, schools and businesses or the Scottish National Party’s (SNP) reducing VAT on energy efficiency improvements – something that would likely help to create an able to pay market in energy efficiency. All these ideas matched well with our industry manifesto. Let us not forget energy efficiency helps reduce our carbon emissions, keeps people in warmer homes, reduces illness and keeps customers’ bills down - win, win, win and win!

At the recent Labour and Conservative Party Conferences I spoke on a housing panel where I challenged whether as a country, we were really building homes fit for the future.  Labour, the Liberal Democrats and the Green Party have all committed to tightening building regulations. And we’ll need this if we’re to address the 14% of CO2 emissions that come from our homes, as well as prepare for a decarbonised heating industry.

While the Conservatives did not address how they could decarbonise heating (outside of their previous plan to ban new homes from 2025 from using gas in heating), it was the other parties that specifically had actions for decarbonising heat. Labour, Greens, SNP and the Liberal Dm

Investment in low-carbon and renewable infrastructure

A likely big winner after the next election will be our booming renewable energy industry with all parties focusing on investment in low-carbon and renewable energy generation. Once again, straight out of our industry manifesto. Under Labour the next Government will ensure 90% of power will be generated from renewable and low-carbon sources by 2030, while the Liberal Democrats have said 80% will be generated from renewables. Both parties will allow the development of onshore wind and solar generation. Another win for our manifesto, and our efforts to meet net-zero.

Both the Conservatives and the Labour Party committed to developing new nuclear power projects, once again another step towards net-zero and a low-carbon energy industry. And something that has gained more traction and supporters over the last few years, there is strong support for new low-carbon technologies such as Carbon Capture, Usage and Storage (CCUS) from the Conservatives, Labour and the Liberal Democrats. Our industry manifesto called for greater support for new nuclear projects and the development of CCUS – another win for our engagement and policy development.

The Conservatives also highlighted that they’d invest further in the UK’s storage technology and capacity – but only after they’d got ‘Brexit Done’ (obviously). Picking up on one of the key themes from Boris Johnson’s first speeches as Prime Minister, back in July.

What all these manifestos mean is that in delivering net-zero we’ll need a broad generation mix, and low-carbon and renewables will play a more prominent role, alongside further developments in storage.

What about the retail market?

Net-zero takes centre stage for all of the parties’ action on net-zero. But I think we’re forgetting that net-zero also relies on a sustainable energy retail market – one that customers see as legitimate. Only the Conservatives and the SNP mention any action on the energy retail market.

The Conservatives are the only party to commit to keeping the energy price cap in their manifesto, while the SNP have proposed changes to the market that would cap the most expensive tariffs, put a duty on retailers around the language on bills, and introduce a cap on credit that could be built up by companies from customers bills.

It is obvious that the Conservatives and other parties see the price cap as the future of the market in the next Parliament. It will be interesting to see how that develops with the annual reviews from 2021 and the 2023 expiry date of the price cap. It is not without reason that we could have the next election after this one in 2025 so the future of the cap will likely need to be addressed by the next Government.

Renationalisation – the wrong answer to a big question

It is probably a good time to turn to Labour’s plans for renationalisation – something that Plaid Cymru this week supported – as long as the Welsh Government gained control of the two Welsh networks. On paper renationalisation seems to be the wrong answer to a bigger question.

That question being – how do we ensure a transition to a low carbon economy in a way that customers see as fair.  

Annual the UK energy industry invests over £13bn. This is delivered through private investment and by incentivising innovation and driving prices down through competitive auctions, which have made renewable generation ever cheaper while delivering green jobs, boosting economic growth and lowering costs for consumers.

I can’t see how making major changes to the energy system through renationalising the 6 largest suppliers and the networks will help the UK meet net-zero by 2050, let alone sooner. At a time when the industry should be joining up to tackle net-zero, they’ll be having to get used to new structures and systems, including new decision-making structures.

This sector has led the way in reducing emissions – it’s not true that the current structure hasn’t been delivering. Such structural changes may likely distract the industry from innovating and meeting net-zero, at a time when the Government and the industry should be working together in a shared ambition to meet net-zero.

What they’re not speaking about

There is one big gaping omission from every single one of the manifestos – and this how any of the parties’ plan to complete the Smart Metering Programme. This surprises me for a number of reasons, one if we’re to get anywhere near net-zero then we’ll need every property to have a smart meter. They’re the gate way to a more flexible, data driven energy industry. The second reason why I’m surprised that smart metering isn’t even mentioned in any of the manifestos is that is a major infrastructure upgrade.

It is imperative that we get this programme finished, the energy industry is working to find the most suitable way, that keeps bills down for customers, while delivering net-zero. Our recent consultation response to the Department of Business, Energy and Industrial Strategy, may have raised some eyebrows but it set out firmly what we believe needs to change in the programme to increase the numbers of smart meters in the home – including having smart meters fitted in every new property.

Time for action

While the manifestos set out a universal commitment to a net-zero economy, whoever wins will need to take urgent action on net-zero and by urgent because we simply cannot afford to delay any further - and Energy UK will continue to push for more progress.

There are now just 120 quarters until 2050, with 2 quarters already passing since the passing of the net-zero legislation.

The industry needs urgent policy certainty and a clear timetable of how we are going to meet the challenge - and seize the opportunity of decarbonising over the next 10, 20 and 30 years.

I am in no doubt that this can be delivered thanks to private investment but we need clarity and confidence that the next Government is fully behind meeting net-zero, and we turn the rhetoric into reality.

Simon Markall, Head of Public Affairs and Engagement, Energy UK

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