Unfinished business | What’s still in the government’s energy in-tray?

Rishi Sunak’s announcement last Wednesday that he is calling a surprise general election on 4 July shocked many. Those in the dark seemed to include junior minister Amanda Solloway, judging by her demeanour at one of the last select committee hearings of the 2019 Parliament on Wednesday afternoon, just a couple of hours before Sunak stepped out into a downpour in Downing Street to unveil the date.

So as much government business grinds to a halt in the pre-poll period, what is left in the Department for Energy Security and Net Zero’s (DESNZ’s) in-tray?

REMA (Review of Electricity Market Arrangements)

The most far-reaching item in the government’s energy policy in-tray is REMA. However, consultation has just closed on the slimmed down set of proposals outlined in the second stage of REMA consultation, which ruled out breaking down the wholesale market into hyper-local nodal pricing points.

Given the complexity of the proposals outlined in REMA and the number of options still on the table, observers expect to see no progress on the exercise before Parliament’s summer recess, meaning it is still on track, albeit slowly.

Contracts for Difference (CfD) Allocation Round (AR) 6 

Despite today’s (29 May) launch of the Non-Qualification Review Assessment Window for AR6, this is one of the processes most likely to be derailed by the timing of the general election. The government had already proposed an increase in this year’s CfD budget following the failure of last year’s AR5 to attract any bids for contracts from offshore wind farm developers.

Ministers were due to decide during the summer on whether to further increase the AR6 budget. However Utility Week has been told that the advice from DESNZ officials had yet to be submitted to ministers before the end of last week, suspending this process until at least the general election.

In addition, civil service protocols mean that new ministers cannot be shown their predecessors’ advice, meaning this work will have to redone if there is a change of government.

While Labour’s ministerial team will be keen to get on with the budget setting process, any budget increase will have to be signed off by the Treasury, making an announcement before August hard to envisage. However one energy policy source says that keeping to the original September award for CfDs may be “feasible”, meaning that the overall process may not be too badly derailed.

Solar road map

One of the immediate casualties of the suspension of government business was the publication of the joint government-industry solar road map, which is designed among other things to outline steps to incentivise the roll out of solar panels on rooftops and brownfield sites.

Junior energy minister Andrew Bowie told the House of Commons last week during the final DESNZ ministers question time before Sunak called the general election that the road map was due out in the “next few weeks”.

Rebalancing of policy costs

In its energy security plan, published in spring 2023, the government accepted its net zero delivery advisor Chris Skidmore’s recommendation that there should be “significant progress” on shifting policy costs from electricity and gas by the end of 2024.

The plan also committed to outlining a clear approach to rebalancing gas and electricity prices by spring this year. As recently as a fortnight ago, energy minister Lord Callanan said that a consultation on rebalancing would be out “shortly”. However, prefacing this comment by acknowledging that this a “particularly tricky political issue” pointed to why the government has proved so slow to make progress on this issue, which is seen as key to making the running costs of heat pumps more affordable compared with gas boilers. An energy source says that there will “certainly not” be any progress on this issue now before the general election.  

Strategic spatial energy plan (SSEP)

The commission for the National Energy Systems Operator (NESO) to draw up the SSEP – one of the recommendations of last year’s report by former Electricity Networks Commissioner Nick Winser – was sitting on ministers’ desks when Sunak called the general election.

The publication of this commission by the government is required in order for NESO to have a legal basis to prepare the SSEP. However, NESO has already begun recruiting personnel to carry out the work so preparations are afoot even in the absence of a formal ministerial commission.

ECO (Energy Companies Obligation)

Proposals for the ongoing reform of the supplier-funded ECO scheme, currently in its fourth phase, were understood to being considered by No 10 Downing Street when the general election was called. ECO4 and its government funded offshoot, the Great British Insulation Scheme, are due to run out in March 2026. The industry has been pushing for a one-year extension of the ECO4 in order to maintain momentum within the supply chain.

An energy policy source said: “ECO is the only energy efficiency programme that’s actually working. The reason it’s working is that it’s supplier led and suppliers have managed to create long term relationships with supply chain companies. The longer the window, the more clarity for the supply chain.”

Future Home Standard (FHS)

The government has recently finished consulting on the FHS, the new set of building regulations, which are designed to be much more eco-friendly than those currently in place. The need to digest this consultation means that next year’s date when the FHS is due to be implemented should not be derailed.

Clean Heat Market Mechanism (CHMM)

The introduction of the CHMM, which was labelled the “boiler tax” by its critics, was pushed back by energy secretary off state Claire Coutinho in March to next year, only a few weeks before the scheme was due to come into force.

The government still needs to lay secondary legislation to implement next April’s postponed start date for the CHMM, which would mandate boiler manufacturers to sell a ratio of heat pumps for the number of boilers that they sell. Mike Foster, chief executive of the Energy and Utilities Alliance, said: “The awful boiler tax policy relies on a parliamentary vote, which will now fall to the new government to implement. We will have to wait until the autumn, at the earliest, to see this vote take place.”

Sizewell C

In a written statement, issued on the day of Sunak’s general election announcement, energy secretary Claire Coutinho issued a written statement, confirming that the government intended to take a final investment decision (FID ) on the planned Sizewell C nuclear plant before the end of this Parliament. However the government has yet to issue this FID, suggesting that this pledge won’t be fulfilled.

Acquisition-only tariffs ban

Ofgem has already announced it will be making a final decision in July on whether to lift the ban on acquisition-only tariffs from October so this should not be impacted by the general election.