The UK’s investment climate must be improved if the government wants to attract more private sector funding for energy projects, the UK has been warned by industry bosses.
At a summit hosted by energy security secretary Grant Shapps yesterday, the government faced calls from the across the industry to find solutions for challenging economic conditions amid competition from international rivals, including the US Inflation Reduction Act.
Trade association Renewable UK, which represents the wind industry, called on the government to ease funding pressures on energy firms amid its auction rounds for new projects.
Ana Musat, executive director of policy, said: “Wind and solar generate power cheaper than any other new energy source, so the government can improve investor confidence in this space by ensuring that the contracts for difference framework takes account of the economic pressures faced by the sector.”
There are concerns that the ongoing fifth allocation round for offshore wind projects is insufficiently funded at £205m, while the government is also weighing up whether to reform auctions so that they take into account wider societal benefits alongside generation price.
While David Bunch, the country chair for Shell UK, described the meeting as “productive,” he confirmed that conditions for the energy giant’s pledged £25bn of investment in the UK this decade are “crucially dependent on fiscal stability, clarity of business models and ensuring shareholder value.”
Linda Z Cook, chief executive of North Sea oil and gas producer Harbour Energy, which is overseeing multiple carbon capture projects, warned that the company needs “a stable and sensible fiscal environment” in order to “have the confidence we need to continue investing in these long-term, large-scale projects.”
Around 20 industry bosses representing companies from across the sector attended the summit at Number 10 to discuss their plans to collectively invest more than £100bn in the UK economy.
This also included EDF, Energy UK, National Gas, OEUK, RWE and Scottish Power.
Shapps seeks to win over energy bosses
Following the event, Shapps revealed that both government and industry had agreed to work together to boost the UK’s competitiveness and investment into home-grown clean energy.
These commitments would involve creating and safeguarding jobs across the country, reduinge energy bills for consumers and households, and making progress towards net zero.
Shapps said: “We stand at a crucial point in the UK’s energy history: achieving our goals depends on continued close collaboration with the leaders in the industry.
“The consensus among energy firms was clear – there are immense opportunities ahead and these can only be seized if the UK government, industry and regulators work together across the sector to accelerate investment into renewables, bring down bills and deliver on net zero.”
This is the latest update in the government’s energy security week, after Shapps teamed up with Prime Minister Rishi Sunak to confirm at least 100 new oil and gas and two new carbon capture clusters on Monday.
Shapps has faced criticism from green groups over the support for the oil and gas sector, amid pledges to “max out the reserves.”
However, he told GB News yesterday that his ambitions for further fossil fuel exploration were not in contravention with the government’s net zero goals.
He said: “Everyone supports this country’s transition to net zero but we cannot get there by telling people ‘we’re simply going to stop using oil and gas’.
“The only way to do that would be to tell people ‘don’t put your gas boiler on, don’t drive a petrol car’, and do that almost instantaneously. Unless you do that, what you’re really saying is ‘we’re not going to dig our own oil and gas, we’ll import instead’.”