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Q&A - KOE Group: Labour victory – Do they really have all the answers?

8 July, 2024

MultisectorsQ&AEsgPolicy & Regulation

While some parts of the media are still basking in the "triumph" of the recent change in government, the crack team of journalists and analysts at inspiratia have had to cut the honeymoon short to try and analyse what this shift means for energy transition and investment into renewables.

The Labour "landslide", though cautiously predicted, is widely seen as a positive shift for the sector. Now, perhaps it is time to scrutinise the pledges to try and separate political posturing from actionable change.

inspiratia sat down with renewables insider and the chief executive of KOE Group, Gareth Dauley, to discuss what changes, if any, we can expect from the new administration and if it is still possible to adhere to the UK's net zero by 2050 target.

What do you make of the manifesto pledges?

There are a couple that grab your attention, like the proposal for a sovereign wealth fund or GB Energy but with so little detail on the mandate, it is hard to tell if they will have any impact on energy transition. This is what I call all sizzle, no steak.

The sovereign wealth fund is interesting and slightly confusing. From what little information is available, the mandate seems very similar to that of UKIB

GB Energy, likewise, looks good on paper. I see what they are trying to do. They (the government) want to have a state-owned company to be seen as a supplier of energy, to give the consumers a little more confidence in the markets. But unless the new government have a secret cheap energy source, then I can not see the immediate benefit to reducing cost for the consumer - as we do not want to end up like Bulb energy V2!   

The fear for the industry is that the policymakers get wrapped up in short-term gain, a little battery here, a bit of EV charging there, and ignore backbone issues such as grid upgrades and large infrastructure which is expensive and takes time.

This happens all over the world. Politicians and civil servants alike tend to focus on short-term wins, often resorting to tokenism politics rather than pursuing real change because the latter is much harder. 

Is there anything that can be done in the short term to benefit the transition to clean energy?

Certainly, the government can do a lot more to push small-scale solar and battery projects over the line quicker. As things are, if everything goes to plan, the permitting process for solar and battery projects in the UK takes about 12 to 18 months. This timeframe can be made significantly shorter. 

If the government is serious about making changes in the short term, it can push through the NSIP overhaul that has been pledged. 

This may not really be a short-term solution, but we need to start investing in human capital. We have a serious skill shortage in this country, and we need engineering and other technical expertise if we have any hope to pursue more established technologies and even make the more established ones more efficient, hence why I started my charity IntoNetZero - to get more people from a diverse background into the new energy space.

Upskilling the current talent pool takes time, and poaching from industry peers can prove to be very expensive. This cost, in turn, will be ultimately transferred to the consumers. So any promise of lower energy prices with a state-owned utility is not actionable.

Does the change in government make you hopeful?

It is hard to make any conceivable change in the short term.

It is really the civil service that runs the policy, so transitioning governments can not really make a dent on day one.

We need a mass change of policy. And on the other side of the aisle, the voters need to be reminded that energy infrastructure takes a long time to deliver and the progress will be slow in the beginning.

Throwing money at the problem, even in the short term, is not going to solve the problem. We have not got enough companies, talent or even raw materials to deliver what the politicians are pledging.

We also need to remember that we are not competing against ourselves. We are competing on a global basis, countries around the world are pushing through these policies and changes at a much faster rate than we in the UK are. Look at China, their manufacturing capabilities are far superior to ours, and it is going to take a lot of work, for not just us, but also wider Europe to catch up.

We are seen to be somewhat ahead of the curve because we have a more established renewables industry, but there are countries around the world that are quickly catching up and will surpass us very soon.

 What do you make of the government's support for nuclear?

Nuclear is the new green for some reason. Who knew? In this country, we have seen exponential growth in our renewables generation, which is amazing, but the reality is this system needs a baseload. We will become 100% renewable in my lifetime, but we need stability to make sure we do not have major blackouts as we transition to a green economy. The public needs to understand that it is not renewables that will power this country in the short to medium term. We need to balance the system so we can keep the lights on.

Right now, nuclear appears to be the easiest way to get that stability. The UK, unfortunately, still needs Gas to make this transition.

However, the thing with nuclear is that we have not built one in 25, or 30 years. With the Current new fleet, we are over budget and very delayed. And this again comes down to the lack of skills. What the Conservative government was planning, over there last term(s), makes sense, but it is just that they are going about it badly, and a change of government is unlikely to change that right way.

Nuclear provides energy security but the level of security that asset class requires is on another realm. It not only becomes politically led but as energy markets and national security led, which makes this asset class not very appealing to pure-play private investors.

Surely, we must end on a positive note. Is there even the slightest glimmer of light at the end of this tunnel?

It is hard because energy transition is not a short-term issue, and our politicians have enough social issues to tackle with the public, and one of the biggest costs to people/businesses is energy - the sub-category of energy renewables investment takes a backseat. You can not win votes by pledging grid upgrades, so the can keeps being kicked down the road.

It is the same with nuclear. If we go ahead with the new fleet of nuclear as promised, whatever government starts the process is unlikely to be the one in office around the delivery of that power (as it can take 25 years from planning to operational). They (the politicians) know this, and so it is easy to pledge support. They are all betting on this being someone else's problem.

To be fair to the politicians, the system is rigged against them. They know the public cares more about a £2 reduction to their energy bill next month than a chance of a £50 reduction at an arbitrary time down the road. It seems like an impossible issue, but we do not have an option not to do it.

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