Decarbonising the power sector by 2035 is a massively ambitious undertaking, and vital to achieving net zero overall by 2050. In practice, this means that government expects all electricity will come from low-carbon sources by 2035, subject to maintaining security of supply (that is, no blackouts). Demand for electricity is also forecast to more than double over the next two decades as more sectors switch from fossil fuels to electricity. With only 12 years left to hit its ambition, the Department for Energy Security and Net Zero has a lot to do if it is to achieve its ambition, and do so at least cost to bill payers and taxpayers, all while ensuring security of supply so that the lights stay on.
The Department has published a range of strategies and plans that set broad ambitions for the power sector, including the 2021 Net Zero Strategy, 2022 British Energy Security Strategy, as well as sector-specific plans such as the 2021 Hydrogen Strategy. Together with ongoing reviews of market arrangements for buying and selling electricity, and new draft legislation, the range of activities constitute a substantial number of very important energy projects and programmes. The Department should bring these together in a coherent delivery plan so that it can understand how realistic its ambition is, and coordinate and sequence its interventions to best effect.
A delivery plan would also provide confidence to the private sector. This will be essential as government will rely on private investments worth hundreds of billions of pounds in new and upgraded infrastructure. Recent energy policy instability, energy windfall tax and the stop-start nature of some initiatives, such as the Green Homes Grant Voucher Scheme, have eroded investor confidence in government. This confidence is yet more critical now given the scale of spending expected in the European Union and the United States of America on decarbonising their power sectors, risking a flight of capital investment away from the UK.
The Department must also successfully influence other departments with responsibilities relevant to power sector decarbonisation, but has limited levers to do so. Influencing consumer behaviour too, as well as improving energy efficiency measures, could also play a significant role in reducing overall electricity demand, particularly during peak use periods. However, the government does not have clear plans on the demand side, and recent energy bills support schemes have prioritised reducing costs to consumers over reducing demand for energy.