Does government’s green plan have what it takes?

COMMENT It’s clear that Labour is putting climate change and sustainability at the heart of its agenda through its green growth plan. The plan includes a package of measures – investments in renewable energy, strategies to overcome grid constraints and encourage local energy generation, and revisions to the National Planning Policy Framework – aimed at making the UK a clean energy leader and fast-track to net zero. Central to Labour’s vision is its commitment to a net-zero electricity system by 2030. A major move in this direction was Labour’s £8.3bn investment over five years into its flagship project, Great British Energy, along with lifting the ban on onshore wind. Investing in renewable energy is not only environmentally friendly but also financially smart. For developers, renewable energy sources like onshore wind can significantly reduce costs and offer long-term savings. Additionally, properties with ESG credentials are becoming increasingly attractive to eco-conscious investors, boosting value and generating higher demand. Yet financial and infrastructure constraints remain major challenges. The national grid is ill-equipped for the influx of renewable energy projects, causing delays of up to five years and extended connection timelines late into the decade or even beyond into the 2030s. Risky proposition Addressing these issues requires substantial investment – a task that may exceed the £30bn committed over the next five years. Cornwall Insight estimates that an additional £48bn is required by 2030 for grid decarbonisation, beyond what’s already been allocated. This funding shortfall impacts high-demand sectors like data centres, industrial logistics, healthcare, as well as mixed-use developments, residential and educational projects. Without tackling these challenges, the transition to a greener energy system could undermine Labour’s goals. To overcome investment stagnation and drive infrastructure upgrades, innovative funding mechanisms are crucial. Green bonds and public-private investment models provide essential capital and stand out as effective tools. Over a decade of political instability has left the UK a risky investment proposition. In response to this, the National Wealth Fund, proposed by Labour, aims to remove uncertainty for investors. The fund will support critical projects such as gigafactories, hydrogen production and steel manufacturing, consequently helping the UK become a more reliable investment partner and provide direction on priority industries. While the National Wealth Fund addresses large-scale infrastructure needs, it’s equally important to focus on scaling up proven solutions. To maximise its effectiveness, the National Wealth Fund needs to balance investments between new, large-scale projects and existing, effective technologies that are crucial for the UK’s transition to a net-zero economy. One such technology is wind power. Unlike solar energy, which is weather-dependent, wind provides a more consistent source of energy year-round. Its mature and cost-effective technology, combined with a higher capacity factor, makes wind a viable solution for rapid deployment and improving grid reliability. For this reason, Labour will need to prioritise the accelerated roll-out of onshore wind projects to ensure the UK’s energy security and alignment with low carbon goals. Alongside expanding wind power, the Review of the Electricity Market Arrangements consultation could further unlock opportunities for decentralised energy. The current proposal suggests shifting from a single electricity pricing model to a regionalised one, which would enhance local generation and reduce costs. For instance, the transmission constraints between Scotland’s substantial wind generation and high demand in London and the South East highlights the need for a regionalised market. New models, such as locational marginal pricing, could help by addressing grid constraints and incentivising generation near demand centres. Furthermore, the rise of decentralised energy presents additional investment opportunities. Investors are increasingly interested in on-site power generation and energy storage. On-site microgrids enable local power generation and storage, fostering community-level energy solutions and trade. Although these possibilities are not yet realised at scale, they offer great potential for creating a more secure and adaptive energy market. From talk to action Labour’s plan to transition the UK’s electricity grid to nearly full renewable power within six years is ambitious, promising lower energy costs and reduced reliance on international gas. However, its feasibility is uncertain due to the tight timeframe, logistical challenges and the need for planning reforms. Fiscal rules may currently be restricting the government from being as ambitious as it could be on investment and public borrowing. But, alongside general taxation, other options could be deployed such as attractive lending rates through green finance or making more productive use of savings through ISAs and pension contributions. A comprehensive approach to funding is required to mitigate the risk of underinvestment, which would lead to paying more in the long run. It’s easy to make promises in opposition. Governing requires pragmatic, realistic and well-funded strategies that move beyond mere rhetoric. Josh Bullard is director of smart energy sustainability at Hydrock