On 25^th June 2018, the Secretary of State for the Department for Business, Energy and Industrial Strategy made a long awaited oral statement on the £1.3bn Swansea Bay Tidal Lagoon project. Mr Clark set out Britain’s energy policy regarding energy generation which is based around meeting three needs: secure and dependable energy supply; minimum cost to consumers and taxpayers; and meeting our greenhouse gas emission reduction obligations.  In addition, through the Industrial Strategy, policy surrounding energy generation must also secure long-term economic benefit, in terms of jobs and prosperity.

In Mr Clark’s Oral Statement, he relayed the analysis his department had conducted on the programme of 6 tidal lagoons proposed by Tidal Lagoon Power Limited, with particular emphasis on the first proposed project at Swansea. The key finding was that, for the quantum of energy generated by the proposed tidal lagoon over 60 years, the cost of £1.3 billion was too high and that an equivalent quantum of energy could be generated by an offshore wind farm for a much lower cost over the same period, in the region of £400 million. The cost to build all 6 of the proposed lagoons is reported to be in excess of £50 billion, which is two and a half times the cost of the Hinkley Point C nuclear power station to generate a similar output of electricity. Moreover, the tidal lagoon would only produce a maximum of 0.15% of the electricity the UK uses each year.

In addition, according to the Hendry Review, the Swansea lagoon would support only 28 jobs directly associated with operating and maintaining the lagoon in the long term. As such, the project did not demonstrate value for money for consumers and public funds, nor did it meet the some of the key aspects to Britain’s energy policy regarding energy generation.

The reaction in the House to Mr Clark’s announcement was one of disappointment by MPs of all parties. Labour MP for Sefton Central, Bill Esterson, responded (on behalf of Dr Alan Whitehead, Shadow Minister for energy and climate change who was unable to attend), “I am afraid that this statement is evidence of yet another failed Government policy; it is a missed opportunity for the domestic economy and for our export potential…Approving the lagoon would have been a positive step, taken by a Government with a clear vision for the future, willing to lead the way in new, innovative technology and strongly supporting British industry”.

A major supporter of the project, Conservative MP for Preseli Pembrokeshire, Stephen Crabb, asked Mr Clark to confirm that the announcement does not mean that Government has closed the door on future investment in wave power. Mr Clark confirmed that the Government is still open to investment in tidal power but the proposals would need to meet the Government’s policy on energy generation activities.

Labour MP and BEIS Committee Chair, Rachel Reeves, asked why it had taken the Government five years to make this decision and what the Government has learnt from this process. Ms Reeves also stated that “Frankly, a lot of effort has been put into this project by business, the Welsh Government and others, and I think that many people have lost confidence in the Government’s programme for renewables because of this”. Mr Clark responded that Government evaluated every aspect of the process and that Government’s decision and process will be found to be exhaustive and rigorous when it is scrutinised by the BEIS Select Committee.

Former Secretary of State for Energy Sir Edward Davey criticised the decision. He said there is evidence that the price of future tidal lagoons would fall dramatically after the Swansea Bay Tidal Lagoon, and asked for all of the evidence and analysis to be published. Mr Clark responded that the technology used for the project is not subject to the same degree of cost reduction as other energy technologies and all analysis will be published.

Following the statement, Welsh Secretary Alun Cairns said: “I realise the disappointment this decision may cause, but ultimately this project did not meet the threshold for taxpayer value.” First Minister Carwyn Jones tweeted that it was a “crushing blow to Wales”.

Overall, a final decision on the project has been welcomed, even though it is not necessarily the desired outcome for the project’s supporters. Such is the popularity of the project in Wales, that the decision itself and the drawn out decision-making process has caused much frustration. Supporters of the project argue that this is a loss for the Welsh people, the UK’s steel industry and UK consumers as a whole. There is now an even greater need for industry to continue to focus on innovation to reduce the costs of construction to make wave and tidal power more competitive.

UKES continues to believe that Wales and the rest of the UK can be established as a world leader in tidal and wave technology, providing a competitive source of low-carbon energy, but any future scheme will need its promoters, industry and Government to work together to make the most compelling and attractive proposition. UKES would be delighted to help similar schemes in the renewable energy sector by supporting their promoters’ Government engagement and strategic communications with industry to put together the attractive proposition to which Government can say ‘yes’. To find out more about how UKES can help you, please email cara.meadows-smith@ukenergystrategies.com.

To watch Mr Clark’s statement on energy policy, please follow this link –

https://www.parliament.uk/business/news/2018/june/statement-on-energy-policy-25-june-2018/

To read the transcript, please follow this link –

https://hansard.parliament.uk/commons/2018-06-25/debates/02B6422D-3556-4219-B419-5D4942F7FC53/EnergyPolicy

Greg Clark, Secretary of State for Business, Energy and Industrial Strategy, provided an oral statement on nuclear power on Monday 4^th June 2018. Mr Clark was joined by Business Minister Richard Harrington who is responsible for nuclear power.

What was said 

Nuclear power has a role to play in the UK’s low carbon future. It currently provides 20% of UK electricity needs. It must continue to provide secure and reliable base-load power at the least cost.

Discussions are on-going regarding a direct investment in the £12bn Wylfa nuclear plant in Wales, which would be made alongside the Japanese Government and Hitachi. Mr Clark reiterated that future nuclear projects would need to be financed by the private sector, while underlining Government support of the sector. Government has engaged with Industry to set out a sector deal for nuclear, which would include proposals to reduce the capital cost of new plants while investing in new forms of technology. The sector deal will be published shortly.

Shadow Secretary of State for BEIS response

Rebecca Long-Bailey, Shadow Secretary of State for Business, Energy and Industrial Strategy, said there is cross-party consensus for the continued role of nuclear within the UK’s energy mix. She questioned the “lack of transparency and Parliamentary scrutiny” of the Government’s deal with Hitachi thus far and called on the Secretary of State to respond to her request for information. She urged Mr Clark to urgently meet with the Welsh Government and develop a deal for the Tidal Lagoon Power project.

Follow-up questions

The debate prompted questions from across the House, most notably from: Conservative MP and former energy secretary Sir Michael Fallon; Chair of the BEIS Select Committee and Labour MP Rachel Reeves; Conservative MP Stephen Crabb; former energy secretary and LibDem MP Sir Edward Davey; Green Party MP Caroline Lucas; Conservative MP John Whittingdale; and Conservative MP and Backbench Business Committee member Nigel Mills. The debate included mention of the following topics:

• UK electricity needs;
• Low-carbon economy;
• Hinkley Point C;
• Wylfa Newydd power station;
• Hitachi;
• Sizewell C;
• Future nuclear power plants.

Ms Reeves asked what assurances have been provided to Hitachi regarding the UK’s future relationship with Euratom, our nuclear cooperation agreements more generally, and the Office for Nuclear Regulation’s ability to recruit safety inspectors. Mr Clark responded that the desire for the greatest possible continuity of existing arrangements is known to Hitachi and mutually beneficial.

Mr Crabb asked Mr Clark what discussions are taking place with the Welsh Government to ensure that opportunities are maximised for the Welsh business supply chain. Mr Clark responded that BEIS is working closely with the Welsh Government to ensure that the Wylfa nuclear plant benefits people across Wales and the UK.

Sir Edward Davey highlighted recent dramatic investments in large-scale renewable power and advances to storage technology, and how these developments affect the decision on the Wylfa plant. Mr Clark responded that the Government supports a diversified energy supply of which nuclear is a very important part.

Ms Lucas clarified that there is not cross-party support on nuclear power and asked why the Business Secretary does not invest the money instead in renewables, a sector where investment is at an all-time low. Mr Clark responded that the UK is leading the world in offshore wind development. In addition he said that investment in new nuclear is strategic and beneficial to job creation, particular in coastal towns.

What this means

The Government’s decision to directly invest into the Wylfa nuclear plant is strategic and necessary. The nuclear industry will remain a vital UK energy source for the foreseeable future, and remain a significant source of regional job creation. While assuming increased adoption of renewables and advancements in storage technology, the UK’s energy mix needs to remain diversified for at least the next two generations, in order that the UK can manage energy costs (both in terms of deployment and on behalf of consumers), retain its security of supply and meet its climate targets. Government needs to continue investing in new technologies and projects that will economically benefit the country and consumers. Further announcements and policy clarity would be welcome by businesses operating within these sectors.

The full transcript can be found here – https://hansard.parliament.uk/commons.

If you would like further information or want to know more about how you and your firm can engage with Government email cara.meadows-smith@ukenergystrategies.com.

The Rt Hon Claire Perry, energy and clean growth minister, has announced £21.5 million of UK funding for Carbon Capture, Utilisation and Storage Technologies on Wednesday 23rd May 2018.

Ms Perry said that the UK will be leading an international challenge with Saudi Arabia and Mexico to remove carbon from emissions.

She went on to state;

“My ambition is for the UK to become a global technology leader in carbon capture, working with international partners to reduce its costs. As the UK has led the debate globally on tackling climate change and pioneering clean growth, we are leading this global challenge with an initial £21.5 million investment in CCUS innovation – a key part of our modern Industrial Strategy.”

The full announcement can be found here – https://www.gov.uk/government/news/uk-to-lead-global-challenge-to-clean-up-carbon

If you or your firm would like assistance engaging with Government, email UK Energy Strategies at cara.meadows-smith@ukenergystrategies.com.

Today (22nd May 2018), Secretary of State for the Department for Environment, Food and Rural Affairs, Michael Gove, published the 2018 draft Clean Air Strategy. DEFRA has also opened a consultation into the strategy that will close on 14th August 2018. The strategy follows the UK being referred to the European court of justice for failing to tackle illegal levels of air pollution, which could lead to a multi million euro fine if the UK fails to address the issue.

Ahead of the launch during a visit to meet air quality researchers at Imperial College, Mr Gove said: “Government cannot act alone in tackling air pollution. Our strategy sets out how we will work with businesses, farmers, industry and households to develop innovative new solutions to reduce emissions. It also highlights how we can all take action and play an important role in cleaning up our air.”

The strategy has already seen criticism from Green MP Caroline Lucas; chair of the All-Party Parliamentary Group for Air Pollution, Geraint Davies; representatives of Greenpeace; and members of the Labour Party for allegedly being inadequate and falling short of the Government’s obligation.

The draft strategy and consultation information can be found here – https://consult.defra.gov.uk/environmental-quality/clean-air-strategy-consultation/

If you or your firm would like assistance responding to the consultation, email cara.meadows-smith@ukenergystrategies.com

Energy and clean growth minister Claire Perry published an article, The future is beneath us, originally in the Sun on Friday 18th May 2018.

In the article, Ms Perry set out the benefits and the role gas will play in the UK’s future and said Government is committed to “support the development of onshore British shale gas and to deliver a clean safe and affordable energy supply for the country”.

The full article can be found – https://www.gov.uk/government/speeches/the-future-is-beneath-us?utm_source=1eafd99e-f777-4d58-9048-473afabe8802&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

Minister of State for Universities, Science, Research and Innovation Sam Gyimah has published an article in the Huff Post, Securing Britain’s Energy Future After Brexit. Mr Gyimah announced Government has opened the headquarters of the Faraday Institution at Harwell campus in Oxfordshire and it has launched the EnergyTec Cluster to develop the next generation of green technologies.

Mr Gyimah hopes the UK will become a leader in battery technology and said, “New developments in batteries are essential to making clean economic growth a reality: they allow us to store renewable energy created from renewable sources, and allow us to make better, cheaper low-emission vehicles.”

Read the full article at https://www.huffingtonpost.co.uk/entry/britain-energy_uk_5af2ef9ce4b0a0d601e8b09e.

Cuadrilla has successfully completed drilling its first well at Preston New Road in Little Plumpton. It plans to apply for permission to start hydraulic fracturing this summer. Cuadrilla has planning permission to drill up to four horizontal wells in Lancashire.

Find below a snippet of this week’s UK Energy Report, the full report can be viewed here.

IN THE NEWS THIS WEEK

• Global demand for energy up over 2% last year
• ON and RWE scrap plans to merge
• Earth Hour
• Opec and Russia discuss extending alliance

The UK Government’s short-termist energy “policy” has been criticised by E.On’s Chief Executive saying “Policy and business have to be in line; there has to be an implicit partnership, or an explicit partnership”. This is one of the founding principles behind UK Energy Strategies. We believe the Government should set out a 40-year energy strategy in collaboration with the energy industry and other key stakeholders. We are working with industry leaders and Government to achieve this step-change in the approach taken by both industry and Government, in the interests of the UK. Government and Industry have a duty to ensure that the UK can heat its homes, keep its lights lit and ensure the UK generates as much of its energy as possible, reducing its reliance on imports and therefore the risk that entails, whilst meeting its carbon targets. That clarity over long-term policy is fundamental to secure the investment decisions which the UK needs industry to take.

If you are not already engaged with us, or you would like to find out more about how you can help to forge and influence a partnership between ‘policy and business’ (or Government and Industry), please contact cara.meadows-smith@ukenergystrategies.com.

Follow the link before for a briefing on the relevant Government officials for the Oil and Gas Sector.

 UKES Key Government Stakeholders for Oil & Gas March 2018

The World’s Eyes are on Bonn for #COP23

UK Energy Report 16 November 2017