The Crown Estate’s partnership with GB Energy is welcome – the next big challenge is grid capacity

The government’s announcement that GB Energy will work with the Crown Estate in England and Wales, along with the looser regulations on the Crown Estate’s ability to borrow and invest proposed in the King’s Speech, are sensible moves to speed up delivery of new offshore wind. With wind expected to provide the backbone of the UK’s decarbonised power system, these reforms, which follow the new government’s commitment to onshore wind and its backing of three new solar farms, are critical. 

The Crown Estate owns the seabed around Britain, leasing sites to offshore wind developers who must then get planning permission and connect to the grid. But it is taking years to get planning consent and developers are being given dates to connect to the grid in the 2030s – after the government’s 2030 clean power target.

Using the Crown Estate and GB Energy to take responsibility for the early stages of development for offshore wind projects should create efficiencies of scale, speeding up development and getting more offshore wind online faster. The Netherlands  ⁹ https://www.government.nl/topics/renewable-energy/offshore-wind-energy  or Denmark  ¹⁰ https://www.sou.gov.se/contentassets/ac6cb0d4637e433cb406fbbb3860d688/study-2024-02-22-of-regulations-in-denmark-finland-germany-and-the-uk.pdf  , for example, have taken a similar approach. However, generating more power is only part of the challenge.

Grid upgrades are crucial – and won’t be straightforward to deliver  

As the prime minister has outlined, another big challenge is grid capacity. New renewables are only helpful if there is enough capacity to carry all this new power around the UK. This is a particular issue for offshore wind, which is generally located far from sources of demand and needs to be carried long distances before it is used. The National Grid currently pays renewable energy generators billions – over £1billion in 2022  ¹² https://www.nao.org.uk/wp-content/uploads/2023/03/decarbonising-the-power-sector.pdf  alone, for example – to reduce supply when there is more electricity in some areas than the grid can safely handle, money that ends up on customers’ bills. If lots of renewable generation is added without grid capacity to move it to areas of demand quickly or the ability to store it to be used when renewables are generating less power, then those payments will increase.  

So grid upgrades are critical. But many countries are also trying to upgrade their grids, and there are shortages of both key equipment and the skilled workers able to make those upgrades Then there is the vocal opposition, in some areas, to pylons, which are unpopular but much cheaper than undergrounding cables – an additional cost that again ends up on bills. The Greens showed last week that even those MPs who are most exercised by the climate crisis can turn NIMBY when faced with the prospect of their constituency being defaced by new power lines.  

The government’s planning in opposition is seen in its energy mission

In the long term a decarbonised power system should mean lower bills for consumers, but that depends on how energy markets are regulated. And in the short term the government could argue that doing more of the pre-development work for new generators means they should accept a lower strike price in the next Contract for Difference (CfD) auctions (which guarantee generators set price for the electricity they produce). However, given the failure of the last round of CfD auctions, which saw no offshore wind contracts issued as generators felt the price was too low given rising supply chain costs, the government will need to make sure that higher costs are taken into account.

The government is showing that the planning it did in opposition is paying off – enabling it to move fast on one of its flagship missions, getting highly experienced people into key roles and streamlining processes. To maintain momentum and give it the best chance of bringing bills down, the next challenge is unblocking the grid.