Can new British PM Keir Starmer achieve his energy pledges?

It is the UK’s largest Freeport supporting over 20,000 jobs and contributing £1.4 billion to the UK economy each year. Perhaps this is why Sir Keir Starmer chose to visit Teesport on the River Tees in April when he and his Labour Party were still in opposition.

But as the UK’s new Prime Minister posed for photos under inky-black skies with a 50-metre high harbour crane towering above him, the message that he had wanted to convey to the public was that Teesport, and other UK maritime hubs, will provide the foundations upon which Labour will build its future energy strategy.

Now that it is in office, if Labour is to double onshore wind, treble solar, quadruple offshore wind and eliminate fossils fuels from the grid by 2030, it will need to make good on its pre-election promise to significantly upgrade Britain’s ailing port infrastructure to the tune of £1.8 billion and to invest in grid, supply chain, innovation and people.

Professor Deborah Greaves, the Director of the Centre of Decarbonisation at the University of Plymouth, thinks that “it will be challenging for the government to hit its energy targets.” She believes that in terms of reaching offshore wind capacity, it will be “ports and the people” that will determine whether or not Labour can meet its goals by the end of the next parliament.

Greaves, who is one of the UK’s leading experts in offshore renewable energy, agrees that the £1.8 billion overhaul of UK ports is necessary if the country is to quadruple offshore wind from 15 GW to 60 GW.

She says that quayside facilities “will need to be upgraded with significant layout space” and adds that investment will be needed “in integration ports, assembly of platforms, plus marshalling for turbine components, cables, moorings and anchors.”

Greaves notes, “The scale of the build-out is enormous: if 17 MW turbines were to be used, building each 1 GW capacity would mean: 59 turbines; 236 moorings and anchors; 70 km length of mooring line; and 196 km length of cables. It would also require a range of vessel types for scour protection, cable laying, transhipment, anchor handling, service operations and support.

She continues, “Moreover, ports will need to be equipped with floating foundation manufacture storage and wet storage facilities, while they will need to be large enough and deep enough to accommodate the vessels that will tow these large floating structures out to sea. Finally, none of this will be possible without a skilled workforce, which will need to triple by 2030 if Labour is to meet its objectives.”

It is a view shared by Neil Golding of the Energy Industries Council (EIC), one of the world’s largest energy trade associations for companies that supply goods and services to the energy industries worldwide.

Golding, who is the EIC’s Director of Market Intelligence, says that rather than quadrupling offshore wind by 2030, the UK was only likely to see a two and a half-fold increase in capacity. However, he is more hopeful that the UK can meet its onshore wind targets.

Supply chain issues

But in addition to personnel and critical infrastructure challenges, he sees supply chain issues as representing a major bottleneck to development.

“A major obstacle for the UK will be sourcing and laying the high voltage cables that will transport the electricity to land. But given that all the capacity has been taken up until 2028, the UK will need to build more substations — both onshore and offshore – and storage facilities, to ensure that it can properly harness all the electricity that it generates,” he said.

“Finally, the UK’s grid system – including its transmission and distribution infrastructure — will need to be significantly enhanced if the UK is to really benefit from a renewables bonanza. These are major impediments that are holding the UK back,” he added.

Another potential blocker, thinks Professor Mahmoud Shafiee, Director of the University of Surrey’s Energy Resilience Centre, is the previous government’s challenges in effectively incentivising companies to bid for offshore wind projects in the last round of the Contracts for Difference (CfD) scheme.

“There are legitimate concerns regarding the effectiveness of the CfD approach despite efforts to increase the strike rate and budget. Looking ahead to the next auction (AR6), it’s essential for the government to focus on addressing these challenges and restoring confidence in the CfD framework.”

Professor Shafiee says that this could involve conducting a thorough review to pinpoint barriers that deterred bidders, reassessing the strike rate and budget to better align with market expectations. He notes that it could mean potentially enhancing incentives or adjusting eligibility criteria to attract more participation from renewable energy developers.

AR6 auction

He believes that the AR6 auction, which will take place in August, will serve as a crucial litmus test for judging offshore wind ambitions. “The success or challenges faced in this auction can provide a good indication of the new government’s ability to deliver on its promises regarding offshore wind expansion.”

As for onshore wind, in which the government has promised to boost capacity form 15 GW to 30 GW, and solar generation, which it has pledged to increase from 15 GW to 50 GW by 2030, Professor Shafiee believes that “the ability to achieve these targets will depend on political stability and the level of support from other parties, stakeholders, and the public.”

To facilitate the development of onshore wind sites, Shafiee says that the Ed Miliband, the UK’s new energy secretary, should “simplify and expedite the permitting and approval processes, clarify regulatory frameworks, introduce financial incentives and conduct thorough public consultations early in the planning stages.”

But ultimately, many experts including Shafiee, believe that for onshore wind projects to be accepted by communities, local people will need to benefit “through job creation, economic opportunities and community investment funds.”

This is one of the reasons why the Labour Party has created GB Energy, a state-owned renewable energy company, which it has said that it will create in its first year of government.

However, there are many questions surrounding GB Energy. Many commentators do not understand its role. There is some confusion as to whether it is a project developer, or an investor, or neither?

But for Nathan Bennett, Renewable UK’s Head of Strategic Communications, the direction of travel is clear “GB Energy will be an investor in the first instance,” he says, “while it gains the skills to become a project developer.

Bennett thinks its metamorphosis into a project developer will most likely occur in Labour’s second and third terms of office — if it is re-elected.

“Taking this path will enable GB Energy to gain skills from early investments and grow. But that said, Labour will want it to deliver tangible results early on in this parliament. To do so, GB Energy will probably look to partner with developers on inflight onshore wind and solar projects. And from speaking to some of those developers, it is an approach that they are very comfortable with.”

But if that sheds some light on GB Energy’s function, as an investor, to what extent is it sufficiently capitalised to make a real difference?

Rebecca Groundwater, the head of External Affairs at the Energy Industries Council, the London-based trade association, thinks the investment is too low.

“We represent the interests of 950 companies in the global energy supply chain. Although we are only a few days into a new government, there are some concerns amongst our members as to what GB Energy is and what it wants to deliver. While I am sure we will learn more in the coming weeks, at the moment it is fair to say that it looks to be underfunded in terms of what it is aiming to achieve.”

Eliminating fossils fuels

If a large tranche of the global energy supply chain has reservations regarding the creation of a government-run renewable energy company, it begs the question as to whether Labour’s promise to eliminate fossils fuels from the UK grid by 2030 is achievable.

Groundwater says, “From looking at EIC Final Investment Decision (FID) Data, which charts where our members are operational and what markets they are in, it is clear that Labour’s 2030 timeline is unrealistic. As to what timeframe is feasible, our members tell us that they need three to five years to transition to a new sector and between five and ten years to make a profit.”

Golding from the EIC adds, “The FIDs clearly show this. Take offshore wind, for example. Our figures show that globally, eight percent of projects have reached the FID stage with a comparative value of USD $99 billion. At first glance that may appear impressive, and it is, until you compare it to upstream oil and gas developments, where, globally, 20 percent have reached FID at a collective value of USD$500 billion.”

“As for the UK, while FIDs for offshore wind look healthy, when you consider that no commercial scale developments have reached FID for Carbon Capture, Use and Storage (CCUS), and only two for hydrogen, there is a huge gulf between where we want to be, and where we are now,” he added.