The Autumn Budget put off some longer-term announcements until a spending review in the new year, yet it did contain some noteworthy detail for the sector. Here, we pull out out some of the relevant points from Labour’s first Budget in 14 years.
Today’s Budget reaffirms the government’s ambition to become a ‘clean energy superpower’, confirming that, having commissioned advice from NESO on Clean Power 2030 delivery, it will publish its own “more detailed Clean Power 2030 Action Plan”.
The decision to limit spending decisions to 2025-2026 means that new announcements are somewhat limited. More far-reaching measures in areas such as the Warm Homes Plan will be considered as part of a longer-term spending review in the new year. Points of potential relevance to the sector include:
Warmer homes
The Budget committed “an initial £3.4bn towards heat decarbonisation and household energy efficiency over the next three years” of which £1bn has been committed for next year. This is largely in line with previous government plans and means the increased demand under the Boiler Upgrade Scheme will continue to be funded.
We expect further details on how the £1bn for 2025-2026 will be spent shortly, along with decisions including the Clean Heat Market Mechanism, as the first step towards a Warm Homes Plan. We then expect further funding up until 2028 will be considered in Phase 2 of the spending review.
GB Energy and investment
The government has allocated “£125m in 2025-26 for Great British Energy (GBE), which will be headquartered in Aberdeen” – with £100m confirmed for project development.
Interestingly, investments will be “undertaken by the National Wealth Fund” while GBE is set up. The National Wealth Fund, which is essentially the UK Infrastructure Bank rebranded, has also been formally established.
CCUS and hydrogen
The Budget confirms the government’s backing for Carbon Capture and Storage (CCUS), allocating £3.9bn of funding in 2025-26 for Track-1 CCUS projects. The government will also support “the first round of electrolytic hydrogen production contracts”, with the Chancellor’s speech highlighting 11 new commercial-stage green hydrogen projects across England, Wales and Scotland.
Nuclear
The government has committed £2.7bn through 2025-26 for the Sizewell C nuclear project, with an anticipated final investment decision in Phase 2 of the spending review. Great British Nuclear’s Small Modular Reactor competition is ongoing and final decisions will be made in 2025.
Energy Profits Levy
The Budget introduces changes for the oil and gas sector, with the Energy Profits Levy (EPL) rate increasing by three percentage points to 38%. Additionally, the government has removed the investment allowance, but retains a 66% decarbonisation allowance rate to support lower-emission projects. Revenues from the levy will be used to support the UK’s energy transition, with a consultation planned for early 2025.
Planning
The government has announced “£46m of additional funding to support recruitment and training of 300 graduates and apprentices into local planning authorities, accelerate large sites that are stuck in the system, and boost and upskill local planning authority capacity”.
What’s next?
The next significant announcements to look out for are NESO’s advice on the Clean Power Plan, due on 4 November, followed by consultation on grid connection reform on 5 November. And we are looking forward to Energy Minister Michael Shanks MP joining us to discuss the Clean Power Plan at the Electricity Storage Network’s Annual Conference on 28 November. You can sign up to attend that event here.