By Felicity Bradstock - Oct 20, 2024
Private companies have committed over $31 billion to UK renewable energy projects, spurred by Labour’s green-focused policies.
The Labour government’s initiatives include offshore wind expansion, carbon capture, and energy storage, attracting billions more in green investments.
The shift in policy promises to boost job creation and advance the UK’s goal of a zero-carbon electricity system by 2030.
The recent change in leadership in the U.K. and the promise of an accelerated green transition appears to have caught the eyes of private investors, who are now promising to spend heavily on green energy projects. Renewable energy firms have committed over $31 billion in the U.K., and other private companies are investing in renewable energy, clean tech, and decarbonization projects across the country, supported by a favorable shift in national energy policy, as well as several other government initiatives.
Earlier this month, some of the world’s largest green energy companies pledged to invest almost $31.39 billion across the U.K., ahead of a meeting with the recently elected Labour Prime Minister Kier Starmer. The PM stated that the investment promise was “a huge vote of confidence” in the government’s “relentless focus to drive growth across the UK”, which would create thousands of jobs across the U.K. Starmer said, “Whether you’re in Scotland, Wales, Northern Ireland, or England – we are creating the conditions for businesses to thrive, and our international investment summit will be a springboard for every part of the U.K. to be an engine of innovation and investment.”
The Labour government has been under pressure to secure funding to support its election campaign pledge to develop a green economy. The party ambitiously committed to establishing a zero-carbon electricity system by 2030.
This Tuesday, the government held the International Investment Summit with the aim of solidifying the U.K.’s leadership across several key industries. At the summit, the government secured $82.43 billion in private investments, expected to support the creation of almost 38,000 new jobs nationwide. The industries receiving the greatest funding were life sciences, technology, energy, and transport.
At the summit, Spain’s Iberdrola and Norway’s Orsted announced investments totaling $31.39 billion and $10.45 billion respectively. Most of these funds will contribute to the expansion of offshore wind warms. More investments were announced in carbon capture and hydrogen. The transport sector also attracted investor interest, with Macquarie announcing plans to invest almost $1.7 billion in green infrastructure and Octopus Energy’s renewable energy projects, which include solar farms and energy storage systems. This will help the U.K. achieve its electric vehicle (EV) adoption targets.
Orsted’s decision to invest heavily in the U.K.’s energy transition reflects the shift in energy policy under the new Labour Party. Mads Nipper, Orsted’s CEO explained, “The reason we are investing in the UK is that alongside the targets for clean energy, we also see the commitment to creating the policy frameworks required to deliver those targets and a government who wants to work with businesses to enable the investments required.” Iberdrola’s Executive Chairman Ignacio Galán echoed this sentiment, stating, “After having invested more than £30 billion in the last 15 years, the clear policy direction, stable regulatory frameworks and overall attractiveness of the U.K. are leading us to double our investments for 2024 to 2028, reaching up to £24 billion.”
The Labour Party’s Manifesto states “The Conservatives’ ban on new onshore wind, failure to build new nuclear power stations, and decision to scrap investment in home insulation landed British families with amongst the highest energy bills in Europe.” Labour outlined plans to “use public investment to crowd in private funding,” as has been seen in the U.S. through the Biden administration’s climate policy the Inflation Reduction Act. It also pledged to roll out its Green Prosperity Plan to “make Britain a clean energy superpower”.
Since winning the election in July, the Labour Party has introduced several new policies and initiatives aimed at accelerating the country’s green transition. The government introduced a bill to create Great British Energy (GBE), a publicly owned green power firm that will develop and invest in renewable energy projects. Labour has also invested in carbon capture and storage projects in Merseyside and Teesside; carried out successful offshore wind auctions, resulting in 10 new projects; created National Energy System Operator (NESO), splitting it from National Grid; approved three large new solar farms and established a Solar Taskforce.
This month, the government launched a scheme to expand the U.K.’s energy storage infrastructure. This is expected to support the development of the first significant long-duration energy storage facilities in almost four decades and help boost energy security. The move is expected to improve investor confidence and unlock billions in funding for vital projects, as well as support job creation.
The U.K. Energy Minister, Michael Shank, stated, “With these projects storing the surplus clean, homegrown energy produced from renewable sources, we can boost our energy security by relying less on fossil fuels, protect household bills, and help deliver our key mission to make Britain a clean energy superpower.”
The dramatic shift in the U.K.’s energy policy under the recently elected Labour government has already helped attract high levels of private funding in the country’s energy transition. Several major companies have pledged billions in investment for a wide range of green energy, clean tech, and decarbonization projects in just the first three months of new leadership. As greater confidence is felt by investors and the government proves its ability to advance the green transition, we can expect to see billions more in investment.
By Felicity Bradstock for Oilprice.com
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