All eyes on the Energy White Paper

The next step in the endless drip-feeding of energy and climate policy is the Government’s Energy White Paper, a document that will set the overall direction for an energy sector that is currently mid-revolution.

The 13 years since the last White Paper landed have brought unimaginable change, with this version expected to deliver the strategies, visions and targets needed to underpin the UK’s shift to a net zero carbon country, backed largely by an expanded and decarbonised power system.

Here are some of the key things to look out for when it is finally released.

Nuclear go-go

Making the headlines will be a decision on nuclear, with Sizewell C expected to be given the green light.

The Government re-confirmed its support for large nuclear in the recent Infrastructure Strategy, and it is no secret that civil servants and regulators have been beavering away on the finer details of how a new project can be funded for months now.

The pros and cons of nuclear have been debated to death, so will be sidestepped here. But what is interesting is what this expected decision means for the wider sector.

Pulling out all of the stops to bring down costs, the Government seems likely to take on an equity stake in the project to get it started, as well as backing a new funding model for the longer term.

The last time that the UK Government owned a stake in a power plant was back in 1995, when the final stages of privatisation saw the remaining 40% of Powergen sold off. The state hasn’t owned a nuclear fleet since the transfer of assets to Nuclear Electric in 1990, a cool 30 years ago.

Since then there has been a relentless focus on the private sector delivering new kit for the power system, spurred on of course by policies to give some industries a kick start.

But there remain a number of technologies that have yet to reach full potential and would be given a huge boost were the Government to show support on a comparable scale as it is set to for Sizewell C.

If I’d spent recent years trying to make the finances of tidal power work, I’d be asking why similar support hadn’t been made available. And while the wind industry is now a roaring success, would more companies be based in Britain if the Government had shown such backing from the get-go?

Impact

With the Sixth Carbon Budget and Climate Action Summit both imminent, the Government will be keen to deliver a message that will impress both national and international onlookers.

The apparent ‘Bidenisation’ of British policy could take another step forward with an announcement to match US ambition on power sector decarbonisation, a significant ramp up from current plans.

Matching the incoming president's target of a zero carbon power sector by 2035 would cause the sort of splash that the Johnson Government would be looking for. Keen eyes, however, will be ensuring that any pledges are underpinned with by a shift from gas to renewables, rather than using negative emissions to offset unabated fossil fuel use.

National Grid scenarios show that a net zero power system by the early 2030s is within reach, although it has been criticised for an over-reliance on BECCS. One might expect some of the names associated with a public push on this goal to hope for a removals-heavy outcome.

An alternative, and potentially more credible, route would bring clarity on the future of renewables, a clear plan for frequent and regular CfD auctions, action to re-ignite the domestic solar market, and, ideally, an end-date for unabated gas generation.

Dynamism

The much-jumped-upon system warnings from National Grid in recent weeks highlight the need for widespread change in the rules and regulations that underpin Britain’s electricity system.

As coal plants have been replaced by wind turbines at a record pace, the governance that fundamentally decides what gets built where and when has failed to keep pace.

Rules that slow down the deployment of storage by failing to recognise its full system value, the absence of proper frameworks for flexibility markets needed to make the most of severely-underused technologies like DSR, and the complete lack of backing to make domestic demand more dynamic need to be fixed quick-sharp so that the grid can accommodate ever-more cheap and clean renewable energy.

There have been clear hints from Government that a change in Ofgem’s remit could be imminent, ensuring that actions from the regulator stop hindering decarbonisation; that more is needed to make markets work for flexibility; and that ways of boosting smart meter use (paying households to have one installed?) are all sorely needed.

All of this is expected to feed into the top-level direction set in the White Paper.

Pipes and wires