The herculean challenge of delivering a Net Zero power system by 2030

Change, it is. The Conservatives are out and Labour have a huge majority.  What does that mean for the Energy sector? Clearly, there are two big pledges in the Labour manifesto to watch: The Net Zero power system target that will be brought forward to 2030, and the launch of GB Energy. Let’s take the first of those: The aim to achieve a Net Zero power system in just five years. 

I’ll start with stating the obvious. Domestic renewable power is cheaper, more secure and better for the environment. Looking at it purely on the basis of cost, research has shown that delivering this by 2030 instead of the previous government’s 2035 target, could save up to £8.7bn^[1].Having more of this power sooner is objectively a good thing.

It’s also fairly straightforward to understand what you need to do to achieve that. We need to deploy a lot more renewable generation capacity than we have today, build out the grid to be able to move that power around, and create enough flexible storage and dispatchable power to smooth out the intermittency of renewables. There are other levers to pull, of course, such as demand-side flexibility, but these are the big pieces in the puzzle.

At the same time, most people will appreciate that each of those activities alone is a huge endeavour. In 2023 just over half of our power was carbon-free^[2]. Accounting for growing demand, that means we are likely to need 2-3x more carbon-free generation^[3] and around 30% more grid infrastructure^[4].

So far, so obvious. These are sensible things to do, and whilst each is a big job in itself, we have plenty of businesses and organisations working hard on projects already.

However, what must not be underestimated is just how hard it is to do all of this in just five years. Amongst other things, it means building 90 new wind turbines and 4.5km of transmission cabling every single day^[5]. That’s even before you consider how much time is actually spent in planning and approvals, and represents a staggering deployment of capital by 2030. All these initiatives are also highly interdependent - the earliest grid connections being offered for a new offshore wind project today are in the mid-2030s, so delivery on all fronts is critical.

Whilst that may prove to be a great boost for the economy, jobs and the environment, we shouldn’t forget that these are major infrastructure projects - something that the UK hasn’t always had the best track record with. These projects also typically take a long time (5-6 years for a windfarm, up to 15 years for a transmission line). That’s not necessarily because of the time it takes to construct assets, but in large part due to the planning, permitting, regulatory approvals and more.

Delivering infrastructure at this scale in just five years is an endeavour perhaps without parallel in peace-time. It will require the almost total mobilisation of resources across government and the economy, and the rapid removal of many of the constraints and red tape in the system.

The good news for the new government is that some things are already working well. Contracts for difference (CFDs) are market leading and the previous government signed up to the Transmission Acceleration Action Plan, launching the National Energy System Operator (NESO) to develop the Strategic Spatial Energy Plan (SSEP). These are all positive steps towards a net zero power system and should be continued by the new government.

That said, there are levers the new government is going to have to pull in a big way if it is to speed up investment in the power system:

• Planning, planning, planning. The planning process must be streamlined and planning departments across the country properly staffed and funded. The government should ease planning constraints across generation, transmission and distribution. This will have to include recalibrating the balance between the need for public consultation and the speed of deploying strategic infrastructure projects.
• Supply chain. A more coordinated approach to engaging global supply chains is required to secure the key materials needed. This is a global race and the UK needs to better leverage its purchasing power. Might this even be a role for GB Energy, which could facilitate collective procurement that delivers economies of scale and reduces delays?
• Energy efficiency. The government can reduce the size of the challenge by quickly improving the efficiency of our energy system. For homes, this would include the rapid installation of insulation, alongside behavioural changes to shift electricity demand to when supply is greatest. Whilst heat pump rollout might raise total electricity demand, the clear benefits of moving away from natural gas mean that this should not be held back.

There are also some things the government can choose not to do. With such a big task ahead, a laser focus will be crucial. Market changes such as zonal pricing will simply create too much uncertainty and slow down progress^[6] . Emerging technologies like Small Modular Reactors (SMRs) or even Nuclear Fusion hold real potential and will undoubtedly have a big role to play in our future energy system^[7]. However, today we have none of these deployed at any meaningful scale, and the lead time for proving them means they just aren’t going to move the needle for 2030.

There will also inevitably be some thorny constraints that would frustrate any government, no matter the size of their majority or the enthusiasm with which they take up the task. The lack of relevant knowledge and skills in the economy is a major issue and not one that can be fixed quickly. The rocketing demand for critical minerals, components and commodities puts into sharp relief the extent to which the UK is but a moderate part of a global race. And it is entirely understandable that people up and down the country want to protect the landscape they care about from being blighted by lots of new infrastructure.

Perhaps, therefore, the most important role that the new government can play is to use its huge mandate to actually lead, rather than follow. People will quickly see windfarms and pylons going up around them, and the government should have the confidence to re-state the economic, security and environmental benefits of Net Zero. It has to become the great sales force for change, persuading and leading opinion, not simply reacting to it. In the past, democratically elected governments have found this to be a hard thing to do. I desperately hope this new government can be bold and demonstrate true leadership.

And most of all, these billions of pounds worth of projects actually have to deliver, and deliver quickly. At Oaklin, we are proud to have worked with some of the biggest, most complex and ambitious energy projects in the world. We have helped our clients quickly establish the strategies, structures, controls, and culture needed to build big net zero infrastructure quickly. These companies are ready to go and set up for success. If the new government focuses on what it can do to remove the barriers, then 2030 might – just – be possible.