UK’s blueprint for energy security goes hand in hand with net zero as oil & gas, nuclear and renewables join forces

After the energy security woes wreaked havoc on the global stage last year, countries around the globe, including the United Kingdom, are taking steps to shore up different energy supplies in a bid to make the system more resilient to shocks. In line with this, the UK government recently set out plans to scale up the deployment of renewables, ramp up nuclear and maximise the oil and gas production from the North Sea to power up Britain from within.

The UK’s plans to boost its energy security cover not only more traditional fossil fuels – primarily oil and natural gas – but also the acceleration of the deployment of clean and low-carbon energy and infrastructure. To this end, Britain took multiple steps, including the confirmation from its Prime Minister, Rishi Sunak, that hundreds of new oil and gas licences would be granted in the UK, with the government continuing to back the North Sea oil and gas industry.

In addition, this entails the revival of nuclear in the UK, including launching Great British Nuclear to drive the rapid expansion of new nuclear power plants in the UK at an unprecedented scale and pace; a £22 million increase in government backing for renewables through the government’s flagship renewables scheme; and the Powering Up Britain package, building on the British Energy Security Strategy, demonstrating how the government plans to secure the energy system by ensuring a resilient and reliable supply, increasing energy efficiency, and bringing bills down.

Grant Shapps, UK’s Energy Security and Net Zero Secretary, commented: “As history has shown, including more recently with the Russian invasion of Ukraine, global energy security and supply is interconnected. Shockwaves quickly travel around the world and hurt consumers and businesses by sending global prices soaring. We acted swiftly to protect the British public, providing unprecedented energy bills support, cutting off all Russian gas supplies, and setting out our blueprint for boosting homegrown energy production to power up Britain.”

In light of this, the UK continues to work together with allies to accelerate the global transition to clean, reliable sources of power and energy efficiency to improve energy security and tackle climate change. As the effects of climate change are becoming more apparent, the UK is utilising renewable energy supplies at an increased rate. This is hammered home by new research from the team at Utility Bidder, putting the UK amongst the top 10 countries which have seen the most significant change in renewable energy supply since 2010. 

As part of a new study into renewable energy across OECD countries, the research revealed the locations with the biggest increase in renewable energy supply, as well as the countries with the highest and lowest supply of renewable energy, and the energy products with the highest percentage of worldwide energy consumption. The study’s findings indicate that oil products make up over 44 per cent of the total energy consumption worldwide – more than any other product. This is followed by electricity (23.01 per cent) and natural gas (21.36 per cent).

According to this study, Iceland is the country with the highest slice of renewable energy cake with 89.47 per cent of energy supply coming from renewable sources. The two primary sources of renewable energy supply in the country are hydroelectricity and geothermal power. With only 3.36 per cent of its total energy supply coming from renewable sources, Korea is the country with the lowest supply of renewable energy. 

The findings of this study are backed by the rise in the UK’s amount of energy coming from renewables from 6.7 per cent in 2010 to 41.5 per cent in 2022. Britain is home to four large offshore wind farms and last year, saw the biggest increase ever in the installation of offshore wind capacity. The country’s dedication to mitigating climate change is hammered home by the fact it became the first major economy to legislate for net-zero. It also cut emissions by 48 per cent between 1990 and 2021 while growing the economy by 65 per cent. As a result, Britain is adamant that it is decarbonising faster than any other G7 country.

On a quest to fortify its energy security and strengthen its green transition efforts, Britain disclosed a £22 million backing for the government’s flagship Contracts for Difference (CfD) renewables scheme, taking the total budget to £227 million for this auction and making available contracts for renewable power generation potentially worth billions of pounds in total over the scheme’s lifetime. This funding for established technologies such as solar and offshore wind is anticipated to ensure the UK’s place on the global renewable energy scene.

This scheme, launched in 2014, is the UK’s main system for supporting low-carbon electricity generation and has already led to an increase in the proportion of the UK’s energy coming from renewables, which fuelled around 42 per cent of the UK’s electricity generation in 2022, up from 7 per cent in 2010 – compared to around 21 per cent in the U.S. and 23 per cent in Japan.

Furthermore, renewables generated a record 48 per cent of Britain’s electricity in the first quarter of 2023, enabling the country to move closer to its targets to deliver a decarbonised power sector by 2035 and net-zero by 2050. The increased funding – combined with the introduction of annual auctions – is seen as a boost in investments in Britain’s renewable industry, while strengthening its energy security, fostering growth in the country’s green industries and reducing exposure to volatile global gas prices.

Shapps further elaborated: “Today’s funding through our flagship Contracts for Difference scheme – the lifeblood of our renewables industry for nearly a decade – will help grow our economy by making Britain the first choice for investors in renewable energy projects and secure skilled jobs for future generations.

“This will be the case for established technologies like solar, and new innovations like floating offshore wind and, alongside our backing for oil and gas, carbon capture and our revival in nuclear, will ensure we can help power more of Britain from Britain for decades to come.”

Moreover, the UK government highlights that the new funding for the current round will mean an increased budget for established technologies such as solar and offshore wind – from £170 million to £190 million; an increase in the budget for emerging technologies such as floating offshore wind – up from £35 million to £37 million; and maintaining £10 million ring-fenced budget for tidal stream projects.

The announcement came at the time when Deputy Prime Minister, Oliver Dowden, visited Able Seaton Port to announce the installation of the first wind turbines at Dogger Bank – becoming the world’s largest offshore wind farm. A specialised floating platform, taller than the Eiffel Tower, has been created to install the wind turbines onto the seabed.

When complete, the 277 turbines, which include British steel manufactured in Wales and processed in Corby and Hartlepool, will be capable of powering the equivalent of up to 6 million homes annually. Dogger Bank is being built in three phases – Dogger Bank A, B and C – by renewables developers SSE Renewables, Equinor and Vargronn.

“This latest financial backing will help to replace expensive imported fossil fuels with cheaper, cleaner, domestic sources of energy. Building a more secure energy future with thriving green industries will have the knock-on effect of helping to grow the UK’s economy and create jobs across the country, with billions of pounds in private investment,” underlined the UK government.

Britain’s Contracts for Difference scheme already helped step up plans to diversify, decarbonise and domesticate its energy supplies, with the last round securing around 11 GW of low-carbon capacity – enough to generate sufficient electricity to power 12 million British homes through nearly 100 clean technology projects. Additionally, the scheme awarded contracts to 52 projects in Scotland so far, which represents around 30 per cent of all CfD projects. In Wales, the scheme awarded contracts to 9 projects, totalling around 260 MW of capacity.

Neil McDermott, CEO of the Low Carbon Contracts Company (LCCC), stated: “The £22 million boost to the Contracts for Difference (CfD) Allocation Round 5 reaffirms the government’s commitment towards transforming Britain into a global leader in renewable energy. Contracts for Difference plays a crucial role in enhancing energy security, driving economic prosperity and propelling us towards a more sustainable future. LCCC currently manages a portfolio of 167 CfDs, and is excited to deliver AR5, furthering our vision to accelerate the delivery of net-zero.”

Shapps believes “immense opportunities” will be ripe for the taking, as the UK continues to invest in renewable and other clean technologies and strengthen national energy security. This was confirmed at an industry roundtable in Downing Street in early August 2023 when energy firms across renewables, oil and gas and nuclear sectors outlined projects worth up to £100 billion (over $127 billion) to be built across the UK over the next decade.

Tom Glover, RWE’s UK Country Chair, said: “With an ambition to invest up to £15 billion in the UK electricity market by 2030, it was good to discuss the issues facing the industry at the roundtable today with Grant Shapps, the Secretary of State for Energy Security and Net Zero, and very reassuring to hear him emphasise the government’s commitment to net-zero targets and the UK’s carbon budgets.

“We emphasised the need for more and regular engagement between government and industry, the continued commitment to net-zero and the requirement for interim targets for the electricity sector. We also welcomed the announcement of the latest Track 2 CCS transport and storage projects, and encouraged the government to go further and faster with other CCS projects and CO2 shipping around the UK.”

Ruth Herbert, Chief Executive of the Carbon Capture and Storage Association, underscored: “We still need clarity on the timeline of support if we are to successfully store 20-30 Mt of CO2 by 2030 in line with government’s net-zero ambitions, and ensure we are not left behind by international rivals. Carbon capture is an essential part of the toolkit for the UK to reach its climate targets. It will decarbonise gas-generated electricity, which will enable more renewables on the system, and it will reduce emissions from critical industries such as steel and cement to continue to support tens of thousands of jobs and ensure domestic supply chain security.”

At the meeting, the British government and the energy industry agreed on the importance of working together across the entire energy sector to boost the UK’s competitiveness and investment in home-grown clean energy; create and safeguard jobs across the country; reduce energy bills for consumers and households; and make progress towards net-zero.

David Whitehouse, Offshore Energies UK, explained: ”These companies’ investments in innovative projects across the sector, from oil and gas to offshore wind, carbon capture and hydrogen are the key to getting to net-zero and beyond. Today’s energy summit reiterated the UK’s commitment to achieving net-zero, and recognised the key role that domestic oil and gas production and carbon capture and storage will play in that journey.

“Through ongoing collaboration and pragmatic policy, I am convinced that the UK can unlock the private investment necessary for an energy future that provides security, affordability, creates highly skilled jobs, and tackles climate change. The offshore energy sector’s proven track record over the last five decades shows what we can achieve when working collaboratively.”

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Jon Butterworth, CEO of National Gas, said: “Gas is at the heart of the UK’s energy security. There were 260 days in 2022 where gas provided over 30 per cent of the nation’s electricity, ensuring the lights were kept on, whilst also keeping our citizens warm and industries fuelled – protecting thousands of jobs and half a million businesses. We welcomed today’s discussion with the Secretary of State and industry leaders, and we will continue to work with the government to strengthen the resilience of our energy sector.”

Ana Musat, RenewableUK’s Executive Director of Policy, emphasised: “At a time when energy security, affordability and decarbonisation remain high on everyone’s agenda, the renewable energy sector welcomed the opportunity to meet with the Secretary of State to discuss the opportunities and challenges we face. There was widespread agreement on the need to improve the UK’s investment environment, as we’re facing very challenging economic conditions and strong international competition for supply chain, skills and investment.

“We are all aware that prioritising the roll-out of cheap, homegrown renewable energy projects is essential to strengthen Britain’s energy security. Wind and solar generate power cheaper than any other new energy source, so the government can improve investor confidence in this space by ensuring that the Contracts for Difference framework takes account of the economic pressures faced by the sector.

“In addition, we highlighted the need to ensure a consistent pipeline of renewable energy projects so that we can maximise the opportunities of supply chain investment in areas where the UK has a competitive advantage, such as floating wind, cables and blades. This will enable us to create more high-quality well-paid jobs, especially in coastal communities outside London and the southeast – offshore wind alone is set to employ over 100,000 people by 2030. Every opinion poll shows strong public support for moving faster on renewables, so it’s essential that the government’s energy security strategy is centred on developing this sector.”

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Linda Z Cook, CEO of Harbour Energy, underlined: “The North Sea oil and gas sector plays a critical role in UK domestic energy security. The sector is also leading the way with CCS which will enable the decarbonisation of the power sector and other industrial sites and deliver the government’s target of capturing and storing 30 mtpa of CO2 by 2030.”

One of the events that made the headlines last week included Greenpeace activists, which scaled the British Prime Minister’s house to demand an end to fossil fuel licencing. The environmental group claims that this step was taken as a way to push the government to deliver cheaper, greener solutions that will bring energy bills down and help tackle the climate crisis.

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Greenpeace said after the event: “Drilling for new oil in the North Sea will do nothing to increase our energy security, or lower people’s bills. Only a commitment to renewables and energy efficiency can. When oil is drilled from the North Sea, 80 per cent is exported.

“The UK will have to buy it back at the international market price. This is because the oil in Rosebank and other parts of the North Sea doesn’t belong to the British government or the public. It belongs to the companies that get the licence to drill. And they will sell it to the highest bidder (which is usually another country).”

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Meanwhile, the Association for Decentralised Energy (ADE) recently published an open letter addressed to Sunak, reaffirming the sector’s commitment to aiding the government in achieving its ambitious net-zero goals. The letter, signed by Caroline Bragg, CEO of the ADE, emphasises the vital role the decentralised energy sector has to play in driving both sustainability and economic growth.

The ADE states: “The Conservative Party has a long and prestigious tradition in acting decisively against climate change. Recent statements by your office however risk undermining that tradition and business confidence to invest in UK Plc, and at a time when other countries are doing so much to attract investment.”

The ADE and its members are committed to contributing to the government’s mission of achieving net-zero emissions and call on the government to recognise the substantial public support for net-zero initiatives, as well as its clear role in driving investment and creating employment opportunities within the UK economy.

Finding the right balance between energy security and the green shift is no easy feat, as shown by many countries across the world. However, this balancing act is still considered to be key to ensuring the UK’s energy security will not be undermined and avoiding a scenario, outlined in a recent report, where Britain would need to import 80 per cent of its oil and gas by 2030 without new investment in domestic production.

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