UK Government Spring Budget fails to woo everyone in the clean energy sector

The UK Chancellor of the Exchequer, Jeremy Hunt MP, announced the Spring Budget 2024 yesterday (Wednesday 6th March) including over £1 billion for its upcoming renewable energy auction, although there has also been strong criticism from some quarters.
UK Government Spring Budget fails to woo everyone in the clean energy sector

The budget for the sixth Contracts for Difference (CfD) allocation round was confirmed by the Chancellor yesterday as part of the Spring Budget, with the aim of supporting further investment into the UK renewables sector and roll out more clean, secure and affordable energy.

The Government has allocated £800 million for offshore wind, which has been given a separate funding pot, representing four times more budget available to offshore wind than in the previous round and following an increase in the  maximum price for offshore wind and floating offshore wind in November. Currently, the Government maintains an ambition to deliver up to 50 GW of offshore wind by 2030, including up to 5 GW of floating offshore wind.

The CfD scheme gives renewable energy projects a guaranteed price for the electricity they generate, boosting investment in the UK – which has increased renewable electricity generation from 7 percent in 2010 to over 40 percent now, according to the Government.  

Separately, the Chancellor has also announced further support for UK green industries, with an extra £120 million for the Green Industries Growth Accelerator, taking total funding to over £1 billion intended to boost advanced manufacturing across clean energy supply chains. 

Despite the Chancellor’s optimism, there has been some criticism of the budget from a number of directions across the UK clean energy sector.

“While there was much to welcome in the Autumn Statement, today’s Budget was virtually nude of anything to bolster one of the UK’s fastest growing sectors: solar power” said Gemma Grimes, Director of Policy and Delivery, Solar Energy UK. “We very much hope that the Green Jobs Plan, expected later this month, will provide a firmer vision of how to grow the industry, by addressing the lack of critical skills in the workforce. This is holding back deployment of the UK’s cheapest source of electricity.”

John Hartley, CEO of Levidian, a Cambridge-based cleantech company said:

“We called on the Chancellor to do more for companies heavily involved in developing technology in our Budget submission, but we now need the Government to redouble its efforts on R&D. This includes creating a new R&D strategy that underpins partnerships between firms, higher education institutions, and Government and takes the UK’s spending on this critical area to the G7 average by 2030. We also need the Government to coordinate an annual national R&D conference to boost cooperation and commit to permanent expensing from all parties – enabling increased private sector research spending. At Levidian, we will continue to invest in R&D to fuel our innovation – and we hope that the Government takes the necessary steps to support our country’s pioneering tech industry.”

While Paul Holland, Managing Director for UK/ANZ Fleet, FLEETCOR, including UK brands Allstar & Keyfuels, said that any investment in energy security is good for UK drivers and that electric vehicles are cheaper to run than internal combustion engine vehicles, he added that “£120 million is a drop in the proverbial ocean”.

“A single commercial 3.5 mW wind turbine can cost upwards of £3.13 million, so if this investment went entirely into wind energy it would only add 134 mW to the UK’s capacity – a tiny percentage increase in the UK’s renewable energy generation” Mr Holland said. “Without investment in electric vehicle infrastructure any increase in renewable energy would be wasted.”

Mark Owen-Lloyd, Director, Photovolt Development Partners, said that the industry needs clarity on why the Secretary of State has delayed this decision for a third time, particularly given that the key questions of the project appear to have been answered.

"While every application requires careful scrutiny, this further delay creates more uncertainty - not just for the project - but for the UK’s position as a green energy leader" Mr Owen added. "The UK simply cannot meet its target to reach Net Zero by 2050 without large scale, responsibly planned and well-designed renewable energy projects like Sunnica. This is a major step back for the UK’s energy security prospects, and threatens its drive to become a green energy leader in the global climate crisis.”

However, Keith Anderson, CEO of ScottishPower, was more positive, acknowledging the UK’s global leadership in developing renewables.

“After the failure of last year’s auction to attract any bids for new offshore projects, today’s announcement is an important test of the Government’s resolve to get back on track with its own green energy targets” Mr Anderson added. “The Government has taken a major step in the right direction today by quadrupling the available budget – a clear statement of intent in ramping up the ambition to bring cheaper, greener energy onto the system quickly. I expect the auction to be hugely competitive. Given the scale of the available pipeline, there is always the opportunity to go further, and so we would encourage the Government to revisit the budget in the light of developments.”

For additional information:

Department for Energy Security & Net Zero

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