In an open letter to industry, noting that the Planning and Infrastructure Act was receiving Royal Assent, Energy Minister Michael Shanks highlighted the role which he said would play in ‘safeguarding the UK’s long-term energy security’ by enshrining in law a new mechanism to support the delivery of the next generation of Long-Duration Electricity Storage (LDES). He said that LDES could encompass Pumped Storage Hydro (PSH), Compressed Air Energy Storage (CAES), Liquid Air Energy Storage (LAES), and certain types of technologies that could supply electricity continuously for eight hours or more without recharging. This eight-hour-plus duration would enable the electricity system to store wind and solar power when it was plentiful and use it when it was most needed.
The Department for Energy Security and Net Zero (DESNZ) announced that the current auction round – Contracts for Difference (CfD) Allocation Round 7 (AR7) – had secured a record capacity of 8.4GW of offshore wind and would ‘unlock’ around £22 billion in private investment. Projects that had won included Dogger Bank South off the coast of Yorkshire, Norfolk Vanguard off East Anglia, Berwick Bank in the North Sea, and Awel Y Môr off Wales. Floating offshore wind projects included Erebus in the Celtic Sea and Pentland off Scotland.
Meanwhile, Energy Secretary Ed Miliband was reported to be negotiating for the UK to return to the European Union’s internal energy market, in which a controversial outline agreement apparently casts the EU’s Court of Justice as the final authority in any disputes arising. In late January he signed a pact – named the Hamburg Declaration – with European allies including Germany, Norway, France, and Denmark, to deliver 100MW of shared offshore wind power through joint projects involving wind farms at sea directly connected to more than one country, the aim being to ‘bolster energy security …. in an era of global instability’.
The Government’s response to a concluded consultation on developing an effective Hydrogen Economic Regulatory Framework for pipeline networks said that it intended to establish such a framework through legislation, licences, and a new hydrogen network code. The aims would be to provide regulatory clarity, support investment, and ensure the ‘safe and efficient’ operation of early hydrogen pipeline networks.
A letter from DESNZ to the National Energy System Operator (NESO) provided an update on the Strategic Spatial Energy Plan (SSEP). It explained why updated cost and demand data were being incorporated into the modelling process, with the intention of ‘ensuring accuracy and transparency’. As a result, the timeline for completing the SSEP would be extended, the purpose being ‘to maintain the quality and credibility of the plan while aligning with the latest available information’.
Water White Paper
The Department for Environment, Food and Rural Affairs (Defra) announced a new Water White Paper setting out ‘clear powers’ for the new water sector regulator, intended to deliver tougher oversight and stronger accountability for water companies. It said that a chief engineer would ‘sit aside’ the new single water regulator, bringing back the ‘hands-on checks’ of water infrastructure and ‘ending the days of water firms marking their own homework, resulting in crumbling pipes and unreliable services’. The new regulator would introduce a ‘MOT’ approach for water company infrastructure, requiring ‘health checks on pipes, pumps and more’, with the emphasis on ‘spotting problems before they happened and preventing water shortages’.
Defra commented that the reforms would put prevention first, requiring companies and bosses to plan for the long term. Where companies fell short, a new Performance Improvement Regime would give the regulator the power to ‘act fast and fix failures’. A 2026 Transition Plan would set out the path to this new system, and a new water reform bill would bring forward the legislation needed to enable the system to take effect. A new Water Ombudsman would also have legally binding powers to resolve customer complaints.
Nuclear tasks
A report by the National Audit Office (NAO) noted that the Department for Energy Security and Net Zero’s (DESNZ’s) ‘mission’ had two pillars: Clean Power by 2030 and Accelerate to Net Zero. It found that in 2024-25 DESNZ had spent £6.7 billion on a range of activities and arm’s-length bodies – an increase of £0.2 billion from 2023-24.
DEZNZ was reported to be discussing with Centrica and EDF the possibility of their investing around £800 million to extend the life of the Sizewell B nuclear power station to 2055.
The Prime Minister confirmed that Wylfa on Anglesey in North Wales had been selected as the location of the UK’s first-ever small modular nuclear power plant. It is to be designed by Rolls Royce SMR and built by the publicly owned Great British Energy-Nuclear company (GBE-N), which has also been tasked with identifying suitable sites that could potentially host such a project.
North Sea troubles
The subject that drew the most adverse comments on a Government decision was, predictably, the Energy Profits Levy.
With no new wells drilled in the UK area of the North Sea in 2025 – for the first time in over 50 years – the Office for Budget Responsibility (OBR) said that revenue from the Energy Profits Levy over the three years since it was imposed had totalled £9.7 billion, compared with the previous forecast of £26 billion. It also announced a forecast for the next three years, of £5.7 billion, rather than the earlier forecast of £15.6 billion for that period.
A statement by Offshore Energies UK (OEUK) focused on the gap between declining North Sea activity and the pace of clean energy job creation. Chief Executive David Whitehouse commented: “The future of the North Sea depends on investment, which won’t come without urgent reform of the windfall tax. If the levy stays in place beyond 2026, projects will stall and jobs will vanish, no matter how pragmatic licensing policy becomes. Fixing this outdated tax is the key to unlocking billions in investment across the UK’s entire energy mix. Waiting four years for reform of this tax is too late.”