Jeremy Hunt has announced that new electricity generation will be exempted from the government’s windfall levy on the sector, while unveiling a wide-ranging package of energy infrastructure planning changes in his autumn statement.
The Chancellor promised legislation for a new investment exemption from the Electricity Generator Levy (EGL), which the government introduced last year to capture a slice of the hike in generation profits that followed the Ukraine war.
The exemption will apply to projects where a decision to proceed has been made following today’s announcement and will also include those being extended or repowered.
In addition, the government has promised to bring forward legislation to provide the Crown Estate with borrowing and wider investment powers to unlock a further 20 to 30GW of new offshore wind seabed rights by 2030.
Both moves offer fillips for the renewable generation sector along with the more generous strike price levels announced last week for next year’s Contracts for Difference auction round, following the lack of bids for offshore wind in September’s exercise.
Renewables developers will also benefit from the government’s wider decision to put previously temporary capital allowances from corporation tax onto a permanent basis.
Hunt’s autumn statement, widely reckoned to be the last before the next general election, also contains a series of announcements on reforming the planning system and speeding up electricity grid connection timetables.
In its response to Nick Winser’s review of transmission planning, which was published alongside the statement, the government has said it will push ahead with the former National Grid chief executive’s recommendation to compensate individuals and communities affected by the construction of new transmission infrastructure.
The response proposes offering discounts on their electricity bills of up to £10,000 to those living close to new infrastructure alongside packages of community benefits. Guidance on the discounts and community benefits, which will initially be voluntary, will be published next year.
The government has also pledged to consult next year on reforms to energy consenting rules in Scotland; to commission the Electricity System Operator to work with government on a new Strategic Spatial Energy Plan (SSEP) and introduce competition into onshore electricity networks in 2024.
It says the SSEP will cover the whole of Great Britain and its first iteration will focus on power and hydrogen assets as recommended by Winser.
The response also backs Winser’s proposals for more standardised and automated design of transmission infrastructure, which it says should receive backing in the National Policy Statements (NPSs).
The government has also said it will look at amendments to the National Planning Policy Framework to ensure the planning system prioritises the rollout of electric vehicle charge points, including charging hubs.
And it will consult on introducing new permitted development rights to end the blanket restriction on heat pumps one metre from a property boundary in England.
The statement also contains the government’s response to the National Infrastructure Commission’s review, submitted earlier this year, of the planning regime for nationally significant infrastructure projects.
While accepting the recommendation of the report that the NPSs should be updated on a five-yearly basis, the government rejects the statutory advisor’s conclusion that this timetable should be enshrined in legislation.
The government has also rejected the NIC’s recommendation that decisions on onshore wind should be brought into the Nationally Significant Infrastructure Projects regime and taken out of the hands of local planning authorities.
Responding to the statement, Energy UK chief executive Emma Pinchbeck welcomed the introduction of an investment allowance in the EGL, which she said addressed one of the levy’s “major flaws” as well as the permanent extension of full expensing.
She said the government’s focus on speeding up the planning process and grid connections is “good news” but expressed concern at the level of energy prices facing customers this winter.
“Even at this late stage, we urge the government to consider bringing in targeted support for those in most need this winter and to get on with looking at how to make bills affordable for all customers over the longer term.”
Welcoming the statement’s package of measures, Energy Networks Association chief executive Lawrence Slade said: “It’s great to see the government acting on the need for planning reform, including the publication of revised energy National Policy Statements. We also welcome the intent to ensure there are direct benefits for the communities hosting critical energy infrastructure and the steps set out in the government’s Connections Action Plan.”