England & Wales Renewable Energy 2024

• Published date: 22 September 2023
• Subject Matter: Energy and Natural Resources, Energy Law, Oil, Gas & Electricity, Renewables
• Law Firm: Bracewell
• Author: Mr Oliver Irwin, Robert Meade, Nicholas Neuberger and Adam Quigley

1. Overview of the Renewable Energy Sector

1.1 What is the basis of renewable energy policy and regulation in your jurisdiction and is there a statutory definition of 'renewable energy', 'clean energy' or equivalent terminology?

The Promotion of the Use of Energy from Renewables Sources Regulations 2011 (SI 2011/243) applies the definition set out in Directive 2009/28/EC (Renewable Energy Directive) on the promotion of the use of energy from renewable sources. This defines 'energy from renewable sources' as 'energy from renewable non-fossil sources, namely wind, solar, aerothermal, geothermal, hydrothermal and ocean energy, hydropower, biomass, landfill gas, sewage treatment plant gas and biogases', each of which is then defined separately.

This legislative framework required the government to ensure that renewable energy comprised 15% of the UK's total energy mix by 2020. The Renewable Energy Directive has now been superseded by Directive (EU) 2018/2001 (RED II). Although the UK has now been released from the renewable energy targets under RED II following Brexit, the UK-EU Trade and Cooperation Agreement includes a commitment to promote energy efficiency and the use of energy from renewable sources and reaffirmation of the EU's 2030 'targets' and the UK's 2030 'ambitions' for renewable energy and energy efficiency.

Ongoing policy and regulation of renewable energy is currently derived from retained EU law and English statute, notably binding commitments to:

• cut greenhouse gas emissions by 78% by 2035 compared to 1990 levels in the Carbon Budget Order 2021 (SI 2021/750); and
• achieve an 100% reduction of greenhouse gas emissions by 2050 compared to 1990 levels (the 'net zero' target) in the Climate Change Act 2008 (2050 Target Amendment) Order (SI 2019/1056).

There are various other policies, incentives, requirements and regulations that are detailed throughout this chapter below.

1.2 Describe the main participants in the renewable energy sector and the roles which they each perform.

Governmental participants

The Department for Energy Security and Net Zero (DESNZ) is responsible for overseeing the electricity sector, including in relation to renewable energy. DESNZ was formed on 7 February 2023 inheriting the energy policy responsibilities of the former Department for Business, Energy and Industrial Strategy (BEIS).

DESNZ is supported by other public bodies, including:

• The Gas and Electricity Markets Authority (GEMA): GEMA has primary responsibility for regulation of the energy sector. Its powers and duties are derived from statute (including the Gas Act 1986, the Electricity Act 1989 (Electricity Act), the Utilities Act 2000, the Competition Act 1998, the Enterprise Act 2002 and the Energy Acts of 2004, 2008, 2010 and 2011), together with directly effective European Community legislation that was retained by the UK after its exit from the EU.
• The Office of Gas and Electricity Markets (Ofgem): GEMA delegates regulation of the renewable energy sector to Ofgem, a non-ministerial government department. Ofgem administers environmental programmes and sustainability schemes on behalf of the government (see question 3.10 for more detail). Key duties and functions concerning electricity include
  • regulating distribution and transmission networks;
  • granting licences;
  • protecting the interests of existing and future electricity (and gas) consumers;
  • ensuring that electricity wholesale and retail markets are competitive; and
  • managing the commercial tender process for offshore transmission projects.

The Energy Security Bill, introduced to Parliament on 6 July 2022, includes measures that would (if enacted as law) establish a new independent body, the Future System Operator (known in the Bill as the Independent System Operator or ISO), which will be tasked with strategic oversight across the UK's electricity and gas systems.

Private participants

• Generation companies: following privatisation of the generation industry in the 1990s, an increasing number of generating companies have been established, including the 'big six': British Gas; e.on; EDF; RWE; Scottish Power; and SSE However, Ofgem has announced that it will no longer use the term 'big six' (who once controlled 98% of the domestic supply market), now that their market share has shrunk to under 75%, after acquisitions, mergers and a customer exodus to smaller challengers.
• Transmission companies: the transmission network is owned and maintained by regional transmission companies National Grid Electricity Transmission plc for England and Wales Scottish Power Transmission Limited for southern Scotland; Scottish Hydro Electric Transmission plc for northern Scotland and the Scottish islands groups; and Northern Ireland Electricity for Northern Ireland. The National Grid Electricity System Operator Ltd (NGESO) is responsible for controlling the stable and secure operation of the national electricity transmission system as a whole.
• Suppliers: energy is purchased from the wholesale market by suppliers and then sold to customers.

1.3 Describe the government's role in the ownership and development of renewable energy and any policy commitments towards renewable energy, including applicable renewable energy targets.

Renewable energy assets will continue to be owned and developed by the private sector with the support of the government in order to satisfy its binding commitments to reduce the UK's greenhouse gas emissions, as described in question 1.1.

In December 2020, BEIS published a white paper entitled 'Powering our Net Zero Future' (Energy White Paper), setting out how the government intends to meet these targets and building on the government's 'Ten Point Plan for a Green Industrial Revolution' (Ten Point Plan) published in November 2020. Key features of the Energy White Paper and the Ten Point Plan include:

• targeting 40GW of installed offshore wind capacity by 2030 (since upgraded to 50GW) through '20 billion of private investment;
• investing '1 billion in the UK's energy innovation programme to develop future renewable technologies such as green hydrogen, with the aim of 5GW of low-carbon production capacity by 2030;
• developing a biomass strategy, particularly in relation to biomass with carbon capture and storage; and
• increasing the funding available to study the use of hydrogen in homes and consulting on the role of 'hydrogen-ready' appliances.

In October 2021, the government published its Net Zero Strategy: Build Back Greener (Net Zero Strategy) setting out how it proposes to meet the 2050 net-zero target. One of the principal ways in which the UK proposes to achieve this is by increasing the use of renewable energy and for the biggest polluters to pay the most for the transition through fair carbon pricing. In July 2022, the English High Court declared that the Net Zero Strategy fails to meet the government's obligations under the Climate Change Act and that it must be updated. In accordance with the High Court's decision, in March 2023, the UK Government published its 'Powering Up Britain' plan which included the UK's Energy Security Plan, the Net Zero Growth Plan, the Carbon Budget Deliver Plan and the government's response to the Independent Review of Net Zero and to the Climate Change Committee's 2022 Progress Report. The government also published its 'Green Finance Strategy'. Some environmental groups claim the revised Net Zero Strategy risks falling short of meeting the legally binding climate change targets.

The Energy Security Bill, among other things, aims to leverage private investment in clean technologies. The government states that the Bill will help drive '100 billion of private sector investment by 2030 into industries to diversify Britain's energy supply. Whilst most of this investment is expected to be made in offshore wind, the government also wishes to promote investment in emerging technologies such as green hydrogen production and carbon capture, use and storage.

2. Renewable Energy Market

2.1 Describe the market for renewable energy in your jurisdiction. What are the main types of renewable energy deployed and what are the trends in terms of technology preference and size of facility?

The UK particularly well placed to take advantage of wind power, with some of the best conditions in Europe and high average wind speeds. As a result, onshore and offshore wind farms together are the largest source of renewable energy in the UK, with 24.6% of aggregate UK generation (including from fossil fuels) coming from wind projects in 2022. Examples include Orsted's Hornsea One, located 120km off the Yorkshire coast in England, which is currently the world's largest offshore wind farm with a capacity of 1.2GW, and the Dogger Bank project which, when completed, will be the world's largest offshore wind farm with a capacity of 3.6GW.

Bioenergy (biomass or waste-fuelled plant) projects are 'the UK's second-largest contributors to renewable energy generation after wind, providing 9.6% of the UK's electricity generation in 2022.

Hydropower and solar photovoltaic (PV) projects contribute a smaller (but still significant) percentage of the UK's renewable energy and tend to be smaller in scale (the majority being less than 10MW), providing 4.4% and 1.8% of electricity generating capacity in 2022, respectively.

2.2 What role does the energy transition have in the level of commitment to, and investment in, renewables? What are the main drivers for change?

In 2019, following Parliament's declaration of a 'climate emergency' and recommendations from the independent Committee on Climate Change, the government legislated for net-zero greenhouse gas emissions by 2050, as discussed in question 1.1. The Energy White Paper, Net Zero Strategy and Powering Up Britain Plan, discussed in detail in question 1.3, sets out how the UK will invest in renewable energy in order to support the energy transition. The Energy Security Bill, if it enters into law, will provide...