The key takeaways from the latest UK budget confirm the Government’s commitment to long-term thinking when it comes to energy security, decarbonisation and accelerating the transition to net-zero.
Alongside reclassifying nuclear power as ‘environmentally sustainable’ to drive widespread sector investment, Chancellor Jeremy Hunt confirmed that Government energy spend will focus on improving supply resilience, committing £20bn to Carbon Capture Utilisation and Storage (CCUS) and other low carbon projects – each of which are scheduled for development in 2024. The ambition is to see 50,000 highly skilled green jobs created and up to 30m tonnes of CO2 stored a year by 2030, equal to the emissions of almost 15 million cars.
Action to stimulate nuclear generation has been announced through the launch of Great British Nuclear – which aims to see 25% of electricity supplied by the UK’s nuclear supply chain by 2050. The Chancellor also unveiled a competition for the development of small modular reactors (SMRs), which will be completed before the end of the year. A spend of £210m with Rolls Royce on its SMR programme has also been confirmed.
From April 1, the Energy Bill Relief Scheme will also be replaced with the revised Energy Bills Discount Scheme. The new initiative will maintain the provision of financial support to businesses, but at a lower level. In practice, this makes it more important than ever for companies to prioritise energy management. A clear focus on energy efficiency measures and investment in low carbon technologies are essential to maximise value from every unit of energy purchased.
As a supplier to major energy users, we are seeing increasing interest in demand for the provision of renewable energy and contracts, such as Power Purchase Agreements (PPAs), that directly invest in renewable assets. With market pricing remaining volatile and legislative pressure looming regarding net-zero – coupled with sustainability ambitions and targets, we only expect this demand to increase.
Government reporting frameworks for larger businesses of more than 250 employees and turnover of more than £36m, such as the Streamlined Energy and Carbon Reporting (SECR) and Energy Savings Opportunities Scheme (ESOS), are already driving transparency and prompting action to demonstrate how businesses plan to deliver energy savings in the future.
So, while businesses may not necessarily see immediate benefit from today’s budget, the longer-term aim is to build resilience and stability of UK supply, thus improving energy security and reducing price volatility. Shell Energy is already working in partnership with businesses across a wide range of industry sectors to support them with their energy management strategies and decarbonisation ambitions.
To find out more about Shell Energy and its integrated energy solutions offering for businesses, visit www.shellenergy.co.uk/business.
Author: Jodie Eaton, CEO of Shell Energy UK Ltd.
