The Autumn Statement: what did it mean for clean power?

The Autumn Statement represented a shift in tone on the government's strategy towards the grid and renewable energy generation. Whilst it was not perfect, it did include a whole series of announcements designed to ‘get Great Britain building and to deliver energy security and the net zero transition’.

So what was announced?

1. Full expensing made permanent 

The most significant measure announced for businesses was ‘full expensing’. This means that the full cost of machinery investment can be deducted from their tax bill in the same way as wages. This is particularly valuable for green industries such as solar and offshore wind where high upfront capital costs can be a barrier to growth. This will also provide support for companies that want to decarbonise by investing in solar panels and heat pumps as well as more energy efficient machinery.‍

2. Planning and grid constraints

Securing planning permission and gaining access to the grid are some of the biggest challenges for decarbonisation. In fact, in England, only 15 new wind turbines have been approved in the last 15 years according to Renewable UK, and renewable projects often face a 10-to-15-year delay in gaining grid connection.

This Autumn Statement attempted to overcome some of these blocks through a series of measures in response to the ‘Winser Review’:

• Forcing councils to refund companies who do not get a speedy response to their applications.
• A community benefit system which would compensate households that have energy infrastructure such as pylons built near their homes up to £10,000 over 10 years.

Before the Autumn Statement, Ofgem also announced that it is introducing rules to remove “zombie” energy projects from the grid connection queue, and plans are being discussed that would allow the government to request energy network companies accelerate upgrades to substations and power lines to connect specific developments.

These measures are welcome, but they do nothing to tackle the effective ban that still exists for onshore wind nor the fact that green energy projects are routinely refused planning permission. Whilst the government is right that communities should be at the heart of renewable energy generation, this cannot come at the expense of support for households living in fuel poverty.‍

3. Green Growth Accelerator Programme

The Chancellor announced that the government has committed £960m investment by 2030 for the 'green industries growth accelerator' programme. While welcome, this support is considerably smaller than the equivalent packages offered by the US and EU, putting the UK at a competitive disadvantage for investment.

4. Other key announcements:

• An exemption from the Electricity Generator Levy (EGL) for new renewable projects. The EGL is often referred to as a ‘windfall tax on non-fossil fuel energy’.
• VAT relief on some energy saving materials including water-source heat pumps.
• Plans to legislate for wider borrowing and investment powers for the Crown Estate to help unlock an additional 20 – 30 GW of new offshore wind seabed rights by 2030.

What’s next?

We were pleased to see the government make a start on a green industrial strategy, but the measures announced fall short of the challenges facing the UK power sector. Rather than reform of our broken energy system, the announcements represent piecemeal policies. 

Further, renewables alone cannot bring down energy bills, they need to be combined with energy efficiency measures to provide decent homes for families across the UK. Given the Autumn Statement made no mention of energy efficiency we are keen to see this be a focus for the government moving forwards.