Government ramps up clean energy investment, but grid challenges remain

The Industrial Strategy announced today reveals a doubling of investment in clean energy businesses by 2035 to over £30bn. The strategy also outlines a new £1bn Clean Energy Supply Chain Fund under Great British Energy, including £300m to invest in offshore wind supply chains.

Further initiatives for the clean energy sector include creating a skilled workforce, lower energy costs for businesses, breaking down barriers to investment and ensuring delivery of key infrastructure including grids.

Sheena McGuinness, Co-Head of Energy and Natural Resources at RSM UK, said: “While much of the focus from the Industrial Strategy has been towards plans to lower energy costs for thousands of businesses by 25%, the government needs to address how it will tackle the failure of the creaking energy grid which is driving high costs. As it stands, energy-intensive businesses pay charges under the British Industry Supercharger scheme and currently receive a 60% discount. This discount will increase to 90% from 2026, in a bid to address high industrial electricity prices and make UK businesses more globally competitive by reducing energy costs.

“But, given the government’s announcement to prioritise investment in new technologies and upskilling as part of its continued roll out of the Growth and Skills Levy, there’s an opportunity to align skills and training with grid reform. Improving the UK’s energy grid infrastructure will result in improved energy security, boost private investment, lower energy costs for businesses and play a key role in the UK’s transition to net zero. Grid connection delays are major barriers to competitive industrial activity and a deterrent to for the development of UK renewable energy sources, as grid connection can take over eight years. As a result, accelerating grid connectivity and delivery and implementing better infrastructure will hopefully attract investment from overseas partners.” 

She added: “Although it’s encouraging to see investment and cost reductions to support energy-intensive businesses, the government hasn’t acknowledged that UK energy prices are higher because of our dependence on gas compared with other sources, for example, nuclear, coal, and renewables. We’re also yet to understand how the government will capitalise on the expertise in Aberdeen’s oil and gas sector, so it’s hoped this knowledge will be used to drive systemic change in the UK energy grid and accelerate delivery of clean energy projects.”