Labour were quick to act on their many election pledges and set about creating the vehicles for change in their first 100 days, through things like GB Energy, a new National Wealth Fund, a control centre for clean power, a record CfD budget and a new onshore wind taskforce.
So what developments did the eagerly-anticipated Autumn Budget bring for the UK’s green agenda, and what does the renewable energy industry think about it?
Now the dust has settled on the record budget announcement last week, we look at the key headlines affecting our industry, alongside a round-up of reactions from some of the sector’s leaders.
Introducing her Budget on October 30, Chancellor Rachel Reeves said the only way to drive economic growth and improve living standards is to ‘invest, invest, invest’.
That came with a promise to increase day-to-day spending at an average of 2% year-on-year between now and 2029-30 to support public services, while boosting public investment by over £100bn during the same period.
While you had to listen for quite some time before there was any mention of clean, green or climate, the Budget did pledge £14.4bn for the Department for Energy Security and Net Zero (DESNZ) – representing growth of 22% excluding balance sheet impacts.
The details of the departmental spending starts on page 82 of a 170-page Budget report. It includes some notable announcements, such as more funding for the Boiler Upgrade Scheme, funding for the ‘heat pump manufacturing supply chain’ and developing a ‘robust grid connection’ process. But do the plans go far enough?
Budget headlines for the Net Zero agenda
We’ve summarised the key headlines of DESNZ spending below.
- £3.9 billion in 2025-26 for Carbon Capture, Usage and Storage Track-1 projects to decarbonise industry, support flexible power generation, and capitalise on the UK’s geographic and technical strengths.
- Delivering on the first steps of the clean energy superpower mission, with £125 million in 2025-26 for Great British Energy, which will be headquartered in Aberdeen.
- Support for new nuclear through £2.7 billion to continue Sizewell C’s development through 2025-26
- Support for the first round of electrolytic hydrogen production contracts, harnessing renewable energy to decarbonise industry.
- Working with the new National Energy System Operator (NESO) and Ofgem to develop a robust grid connection process, to ensure viable projects are connected in a timely manner.
- £1 billion over three years for the Public Sector Decarbonisation Scheme.
- Taking the first step towards a Warm Homes Plan, an initial £3.4 billion towards heat decarbonisation and household energy efficiency over the next three years. This includes £1.8 billion to support fuel poverty schemes, helping over 225,000 households reduce their energy bills by over £200.
- Increasing funding for the Boiler Upgrade Scheme in England and Wales this year and next, following high demand.
- Providing funding to grow the heat pump manufacturing supply chains in the UK.
- £163 million to continue the Industrial Energy Transformation Fund over 2025-26 to 2027-28 to support existing firms to decarbonise and grow.
- Investing over £200 million in 2025-26 to accelerate EV chargepoint rollout, including funding to support local authorities to install on-street chargepoints across England.
- Providing £120 million in 2025-26 to support the purchase of new electric vans via the plug-in vehicle grant and to support the manufacture of wheelchair accessible EVs.
- Maintaining tax incentives to purchase electric cars through Vehicle Excise Duty First Year Rates and the Company Car Tax regimes, as well as extending 100% First Year Allowances for electric cars and chargepoints for a further year.
- To support the development and production of innovative advanced fuels to decarbonise aviation, the government will extend the Advanced Fuels Fund for a further year.
In addition, the government has commissioned advice from NESO on achieving delivery by 2030 and, using this, will publish its own more detailed Clean Power 2030 Action Plan. It also plans to respond to the Climate Change Committee’s Progress Report, publish an updated Carbon Budget Delivery Plan, and capitalise on UK clean energy strengths through the new Industrial Strategy.
Industry reactions to the Budget
As is often the case, reactions to the Budget are mixed. While some announcements have been welcomed, such as the Boiler Upgrade Scheme extension, there is also a feeling that other opportunities have been missed. Concerns remain around issues such as the cost of electrification, a lack of clarity on the Future Homes Standard and ongoing grid challenges.
Heatio – low-carbon start up
Thomas Farquhar, co-founder of Heatio, said: “This Budget is a mixed bag in terms of the government’s commitment to net zero. On the positive side, funding for heat pumps has been extended as well as key investment supporting domestic manufacturing of the technology.
“There are also welcome, clear ambitions in the Warmer Homes scheme, which promotes solar and heat pump installations. The government’s £3.4 billion additional funding for 350,000 homes, including 250,000 low-income homes, is especially good news and a step forward in making energy savings accessible for all, especially those most affected by fuel poverty.
“Encouragingly, the Budget continues to incentivise electric vehicles, enabling us to build on the one million EVs already on the road.
“However, it is disappointing that there is nothing new about deploying more low-carbon tech in British homes; the Clean Heat Market Mechanism is also absent, which will undoubtedly kick-start fossil fuel boiler manufacturers in supplying heat pumps and supporting consumers to transition to green heating technology for their homes.
“The lack of action or clarification on the Future Home Standards is also a missed opportunity. Continuing to build new homes without the basics required to combat climate change makes no sense. The Future Homes Standard should include heat pumps, solar panels and batteries as a standard requirement. The government has also missed the opportunity to bring forward fossil fuel boiler bans on new builds and retrofits.”
Hometree – residential energy services
Hometree founder and CEO, Simon Phelan, said: “It’s great to see consideration in the Budget for clean energy and green hydrogen projects. All this will contribute to enabling the UK to become a renewable energy superpower, a much-needed step that will enable us to increase our energy security as well as meet our net zero targets.
“However, it’s frustrating to see the government is still not tackling the fundamentals of the electricity market, which are holding back millions of people from generating their own renewable energy through solar panels and heat pumps. While electricity is nearly five times more expensive than gas, homeowners don’t want to switch to heat pumps because they seem more expensive. The spark gap – the difference between the cost of electricity and gas – makes us the most expensive country for electricity in Europe.
“We will never be able to reach our climate targets if we continue to rely on fossil fuels to heat our homes, an energy source that costs homeowners more in the long term. To truly become a renewable energy superpower we need to remove gas heating from our homes and closing the spark gap is critical to achieving this.”
Heat Pump Association
Charlotte Lee, Chief Executive of the Heat Pump Association, said: “Given the challenging economic climate, it’s promising to see an initial commitment of £3.4bn towards heat decarbonisation and household energy efficiency over the next three years, as well as an increase in funding for the Boiler Upgrade Scheme for the next two years.
“However, more needs to be done to support the acceleration of the electrification of heat if the UK is to stay on track and meet the carbon emission reduction targets in line with the legal obligations. We therefore await the details of Phase 2 of the Spending Review with interest.”
Naked Energy – solar thermal manufacturer
Christophe Williams, CEO of Naked Energy, said:“Our Net Zero goals haven’t been properly addressed in the Autumn Budget, and heat decarbonisation has been woefully neglected. Heat demand is something that takes up nearly 40% of the UK’s total emissions, so it’s critical to our climate goals that we tackle it.
“The Warm Homes Plan is a great scheme for the residential sector, but we need to be treating the commercial and industrial sector with the same amount of prominence. It’s baffling that we’re not seeing much policy on this front as it’s industry that demands the most heat, but is the hardest to decarbonise.
“It’s here that the government needs to step in. The continued commitment to the Public Sector Decarbonisation Scheme should be viewed as the bare minimum, and we can’t rest on our laurels if we are to decarbonise our heat demand.
“We’ve already seen over a decade of inaction when it comes to heat decarbonisation, and the climate crisis isn’t getting better.”
NIBE – heat pump manufacturer
Paul Smith, MD for NIBE, said: “The Budget featured some positives for the heat pump sector, including an increase in funding for the Boiler Upgrade Scheme for the next two years and support to grow the heat pump manufacturing supply chain. Even with these positives, we are still way behind the rest of Europe when it comes to heat pumps – more needs to be done to accelerate the electrification of heat if we are going to meet our legally binding net zero targets.
“Overall, it is crucial that UK homes become more efficient, to help reduce energy bills and ensure people are warm. Fuel poverty is a very real issue for many, and I was pleased to see an initial commitment to the Warm Homes Plan and a pledge to build 1.5 million more homes.
“Heat pumps and other renewables are included this plan, helping to make low carbon technologies accessible for all. However, I would encourage our government to ensure that plans for the introduction of the Future Homes & Buildings Standards due in 2025 are seen through without delay.
“It’s time to pick up the pace in our transition from fossil fuels. I hope to see more focus on the ways we can achieve this in the years ahead as the first significant net zero milestones loom.”
AIRA – clean energy tech solutions
Daniel Särefjord, Aira UK CEO, said: “The new funding for the Boiler Upgrade Scheme in Rachel Reeves’ Budget demonstrates the government’s commitment to supporting households in achieving lower energy bills, greener homes, and enhanced energy security.
“With heat pump installations hitting record levels, it’s evident that more consumers are seeking sustainable alternatives to gas boilers. The Budget outlines a vision for transforming homes nationwide and this historical change will be achieved by modernising planning policy, shifting taxes from electricity to dirty fossil fuels and renewing the nation’s dedication to net zero. I hope this Budget marks an exciting moment for green energy initiatives and clean energy-tech adoption in the UK.”
Conrad Energy – flexible energy provider
Philip Silk, Development Director at Conrad Energy, said: “There are lots of welcome measures in the Budget and it’s good to see continued support for the development of green hydrogen. I wouldn’t say we’ve broken entirely new ground as there was a fair amount of reiterating previous commitments, but this Budget clearly keeps us on the path to decarbonisation.
“The protracted approval process has been a pretty sizeable barrier to development for some time. It might not sound glamorous, but setting aside additional funding for extra planners could reduce delays and so can only be a good thing.
“Opening the cheque book for new projects is of course vital, but there is still the fundamental problem of how we connect these to the grid. As things stand, the grid works on a first-come, first-served basis, with a pipeline of projects that’s continuing to grow at a rate of around 20GW a month.
“The problem is that viable projects often find themselves stuck behind a horde of zombie projects that have little chance of success. A consultation starts next month to facilitate ‘ready’ and ‘needed’ projects, a positive step for sure, but we really need to see how this works in action.
“There is still the risk that developers will lose significant amounts of capital on large upfront costs getting projects ready, only then to find they are deemed ‘not needed’. If any of the new projects get stuck amid this stalled pipeline, then the effect of the extra investment could be significantly diminished.
“It’s beyond the gift of the Chancellor in the Budget, but we need to ensure that the extra investment pledged today is matched by the promised reform of the planning system and the proposals to prioritise projects ready to start generating power. Otherwise, there is risk that we actually just invest in building a bigger logjam.”
E3G – thinktank
Ed Matthew, Associate Director in Political Economy & Governance, at E3G, said: “The most economically transformational announcement of the day received far less attention. The new Investment Rule, which allows borrowing for capital investment, will unleash £100 billion of additional investment over the rest of this Parliament.
“The biggest chunk of that capital wave will be aimed at developing a net zero energy system. The Climate Change Committee estimates that total public and private investment in the net zero transition has to increase from £10 billion a year to £50 billion a year by 2030 to get on track to our climate targets, helping build the critical infrastructure needed, such as gigafactories, green steel plants and a clean power system.
“Ahead of the election, Labour set out a bold mission to make the UK a clean energy superpower and the decision to change the fiscal rules to enable higher levels of capital investment now gives it a plausible pathway to achieve that mission.
“Two of the delivery vehicles for this investment are now being set up – GB Energy and the National Wealth Fund. Under the Investment Rule, investments made by these institutions through loans or equity stakes will be fiscally neutral. This could allow the government to turbocharge them with much more capital.
“All eyes now move to five upcoming government strategies which will set the foundations for this investment. They cover clean power, industry, infrastructure, homes and an over-arching plan to deliver on the UK’s carbon budgets. The Chancellor has now laid the path for this capital investment boost. This has the potential to deliver the economic growth the government so badly craves. The transformation has begun.”
What do you think? Do you think Labour’s first Budget is a step in the right direction for renewable energy and Net Zero goals? Write to us with your views at linda@renewableenergyinstaller.co.uk.
Image credit: Lauren Hurley, OGL.