What will the energy agenda look like over the coming 12 months?

17/02/23 | Blog
Scotland landscape

The start of a new year always triggers a point of reflection on the year gone by and what the new year may hold. It’s fair to say that 2022 threw us another highly unpredicted event which had major impacts on the energy landscape through the war in Ukraine, touching everything from individual households up to influencing significant re-thinks of energy policy across nations.

No one could have forecast the incredible storm that then ensued here in the UK, with a tumultuous few months in Government creating a dynamism in the policy space rarely before seen.

At Scottish Renewables we’re usually critiquing the slow pace of change in terms of policy, but have recently been blindsided by extraordinary pivots and leftfield thinking - some of which has even made its way into statute books.  

While things have settled down in recent weeks, this policy unpredictability isn’t a good environment for making predictions or for offering insight into what is likely to unfold over the course of 2023. However, having looked at a breadth of sources, there are some observations to be offered here on what the energy agenda is likely to look like over the coming 12 months. 

While there is widespread gloom around the likelihood of a global recession more sharply focused in Europe and the UK than the US, the view of the fortunes of the renewables industry and demand for new generation remains positive.  

Short-term fixes to the energy problem created by constraints in gas supply and its linkage to prices across the power market have been fossil-focused, but there appears to be universal agreement that the medium to long-term plan is to push harder and faster on renewables rollout. Accelerating permitting (planning and consenting) is a task near the top of every country’s list and is being demanded by the money markets in a more positive sort of race to the bottom, where whoever is the fastest will see the cash flow quickest.  

In the UK, our conversation with Government shifted last year from a net-zero focus - heavily driven by COP26 and all the ambition that came with it - to a narrative dominated by energy security.

That was no bad thing for us in renewables: a sharper focus on firming up the power system is long overdue, along with a need for us to get serious about storage. Recent proposed changes to the Capacity Market reflect that shift.  

Part of our growing pains as an industry do focus on the natural pace of grid build out and the constraint that creates, especially in an era of super-abundant offshore wind. We know how to do volume generation and how to scale it; we now need to move our best minds on to the problem of integration and a true renewables-led energy system.     

A revived Labour Party has also brought about more conversations on how government could take a different approach to the energy market. There is no doubt that a more interventionist agenda would be on the cards under a Labour leader, but that’s not to say that any government of any persuasion wouldn’t also take the same route. The need for rapid growth of a hydrogen economy, huge network build programmes and other key issues such as re-wiring the market to make it a less scary place for government and consumers in the future are good reasons why any party might feel a guiding hand would be helpful.  

Geopolitics will continue to dominate 2023 in various ways. Clearly the most prominent is to shift the balance of power closer to home when it comes to power generation. Good news for a country like Scotland with so much seabed leased and natural resources that cover pretty much every renewable energy technology.  

India will be the one to watch; their ambition is quite staggering. Take green hydrogen, where they have publicly committed to reducing costs from $5-6 per kilogram now to just $1 by 2030 and have put a waiver on transmission charges for green hydrogen production to prove how serious they are. Whether ambition turns into achievement is of course a point of debate given recent governance troubles over key investment vehicles. The US are of course back in the game and we watch with interest to see how quickly the home-grown and local content objectives of the Inflation Reduction Act are delivered.  

Most analysts are also predicting much greater scrutiny of green projects, green financing and delivery on green objectives. This will only increase as time goes by to match the need for us to make sure our solutions are real, because there simply isn’t time for them to be anything other than effective.  

Finally, climate remains at the top of the global issues list, sadly this is because of the rapid acceleration of catastrophic weather and environmental disasters which are proving that nature is indeed a force to be reckoned with. Loss and damage reparation was a key topic at COP27 and that conversation has only just begun. Thankfully, nature’s ability to devastate lives also provides some of the answers when we couple it with technology and science to drive renewables, nature-based solutions and a whole host of as-yet-undiscovered innovative products.  

2023, like every year up to 2030, will need to see giant leaps in terms of progress on the critical barriers to deployment.  

We are looking to dive into three of the key issues - network investment and renewables integration, a sustainable CfD to deliver on broader economic objectives and a look at what it’ll take to deliver this pipeline of exciting projects - at our Net-Zero Energy Conference on March 22 in Edinburgh.  

Getting as many of the great minds from our membership involved in the conversation at that event will help us set the agenda for these key discussions with government and policy makers.