Utility Week

16 | MAY 2023 | UTILITY WEEK Policy & Regulation Analysis chunks of the [gas] network," he says, add- ing that the "very, very vague" language in the document points to government starting to look at how to manage a retreat that is intentionally driven by its own policy. "It's challenging for the gas networks to engage with. The government is saying you're going to lose some of the edges of your network you might otherwise have had." Bell says the extension of the BUS poten- tially provides a subsidy for some of the devices that will be installed under the CHMM market mandate. On hydrogen too, the direction of travel looks a little less opaque than it did prior to the plan. While Cadent has been forced to offer an opt-out for residents of its proposed hydro- gen village in Whitby, announcements in Powering Up Britain have given the heat pump lobby a fresh spring in its step. Ministers' official line is that a decision on hydrogen in home heating will be made in 2026 when the various trials have con- cluded, but officials privately see this option "slowly dying a death of 1,000 cuts" before then, says Bell: "They won't explicitly say don't do hydrogen for heat, but what we're going to see in the next few years is more salami slices of government policymaking that make it harder to envisage a long-term role for hydrogen in heating." This will especially be the case if the rebalancing of electricity and gas shiŽs the market by making heat pumps so cheap that installing them becomes a "no brainer", he adds. Phillips agrees. "Reading between the lines, the documents provided a very strong signal in favour of heat electrification," she says, adding that heavy industrial users with no option but to use hydrogen in order to decarbonise their processes are also putting pressure on the government to ensure their access to a scarce commodity isn't swallowed up by home heating. At last week's Aurora Spring Forum in Oxford, DESNZ deputy energy security direc- tor Robert Hewitt mused on the greater value that hydrogen potentially has for running peaking plants rather than home heating. But the government needs to be more explicit in order to avoid giving false hope that hydrogen boilers will be a mass mar- ket option, says Phillips: "The government needs to be very clear about which homes, if any, will be using hydrogen so there's not a nationwide rollout of hydrogen ready boilers. Let's just crack on with this." Gas Natural gas will, though, remain a key ele- ment of UK energy security, Powering Up Britain makes clear. There are few fresh details on further steps to increase the provision of gas stor- age facilities, like an extension of Centrica's Rough facility, beyond a promised update on the issue in the autumn. However, the document says the Future System Operator (FSO), which is being set up under the Energy Security Bill currently going through Parliament, will be tasked with assessing the UK's gas supply security. The methodology for this assessment, covering the availability and reliability of gas sources over a five-to-10-year period, will be published this summer, it says. Getting the FSO to evaluate the medium- term outlook for gas security of supply is an interesting move, says Stonehaven's Bell: "They will have to make judgments about the relative reliability of different sorts of trading partners to discharge that duty effectively. "It's difficult to see what sort of assess- ment they could really do. The barometer is very much whether having this sort of assessment would have helped us better manage the risk Putin's Russia imposed to our energy supply. If it can't answer that question positively, then it's isn't clear what it's there for." Networks and renewables Last month the government's offshore wind champion, Tim Pick, warned that the UK would fall short by 10GW of Boris Johnson's ambition of 50GW of offshore wind power by 2030 unless it can resolve delays on planning and connecting grid infrastructure. Powering Up Britain says the govern- ment will publish an action plan this year in response to Electricity Networks Commis- sioner Nick Winser's recommendations on halving the development time for transmis- sion network projects, which are due to be delivered in the summer. And a fresh con- sultation will take place this autumn on the government's wide-ranging Review of Elec- tricity Market Arrangements. The most tangible moves on networks emerging from the announcement, though, was a beefing up of backing for offshore wind power and associated network infra- structure in the planning process. The latest revisions to the energy National Policy Statements, which were finally pub- lished, propose that offshore wind projects and allied grid infrastructure should be reclassed as critical national infrastructure. Ana Musat, executive director of policy at RenewableUK, believes it was good to see a re-commitment to the headline offshore wind targets formulated during Boris John- son's government. However, she says, the plan still leaves unaddressed some of the key barriers to renewables rollout, particularly planning and grid connections. The government's move to fast-track offshore wind and linked transmission infrastructure as critical infrastructure is promising, she says: "That effectively ena- bles us to fast-track those projects and ensure that we don't get bogged down in debates with communities. Hopefully, that's really going to help us build much faster." EUK's Gray says the movement on fast- tracking the planning process for offshore wind is particularly welcome, given that this is a particularly sensitive issue in East Anglia, which is dominated in Parliament by the Tories. And the £160 million of support being offered for developing a wind manufacturing and supply chain for a fledgeling UK floating offshore wind industry is a good first step, says Musat. However, the government's continuing reluctance to level the planning playing field for onshore wind remains a bugbear, she says: "It was touted by the prime minister as being the reversal of the de facto ban on onshore wind. We don't think that's really the case." It would be "great" to have something like the solar task force, which was announced last month, for onshore wind. But probably the biggest headache for the renewables sector is the government's slug- gish response to the largesse being offered for low-carbon investment via the US govern- ment's Inflation Reduction Act (IRA) and the EU's counter subsidy offer. Chancellor Jeremy Hunt has said he will formulate a response by the autumn, mean- ing that those investing in the UK will have to do with relatively short-term incentives, like the three-year capital allowances announced in March's Budget, Musat says: "We need to have something similar [to the IRA] here. It's not necessarily about offering the same size of subsidy package, because obviously we're a smaller economy, but it's about having something on a more permanent basis." David Blackman, policy correspondent continued from p14 "Reading between the lines, the documents give a strong signal in favour of heat electrification." JULIET PHILLIPS, SENIOR POLICY ADVISER AT THINKTANK E3G

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