The government’s top energy official has rejected concerns that an insufficiently long-term approach is leading to the UK losing out in the race for energy and net zero investment.
Giving evidence to the House of Commons Public Accounts Committee on Thursday (23 March), the Department for Energy Security and Net Zero’s permanent secretary Jeremy Pocklington was pressed on concerns in a recently published National Audit Office report that policy uncertainty risks undermining confidence among energy investors.
Organisations including Energy UK have warned that this lack of confidence has been fuelled by the government’s imposition of windfall taxes on energy profits while new tax breaks and subsidies are being introduced in the European Union and the USA.
However Pocklington said that since returning to the sector after DESNZ’s establishment last month, he had been struck by the appetite for investing in the UK among international energy investment “big players”.
He said: “We are a choice for their main boards to invest based on certainty because we have the market mechanisms that will make a difference and we are developing the business models and regulation that will be needed.
“We will never be able to compete with the US for example on bank balance. We need to be smarter in how we compete internationally for that investment: that’s about a predictable approach to auctions and providing certainty as much as we possibly can.”
In his second select committee appearance since taking the helm at his new department, Pocklington said the “biggest single constraint” to decarbonising the energy system is building out energy networks.
He added the planning issue he is most focused on is development of the transmission network.
Pocklington also told the committee that it is important to foster a range of different energy technologies to ensure that the UK won’t be “beholden” to any particular option on the pathway to net zero.
Pressed on whether the government has a Plan B if its nuclear ambitions cannot be delivered, he said: ”There is no simple black and white solution. We need to maintain range of options because that will ultimately be the least cost solution for consumers.”
Jonathan Mills, director general for energy markets & supply at DESNZ, said the UK’s electricity interconnectors with neighbouring countries had been “very effective at managing a very unusual winter this year” and would play an increasingly important role.
Pressed on moves to reduce the prepayment meter (PPM) premium, he said Ofgem is assessing whether costs are correctly attributed across different groups of customers and if the factors that led to those on PPMs paying more are still true.