BEIS publishes draft energy national policy statements and launches consultation until 29 November 2021

The current suite of National Policy Statements for Energy (NPS) were designated in 2011 under the statutory process outlined in the Planning Act 2008 (2008 Act).

Any proposed energy project which meets the thresholds set out in ss15-21 of the 2008 Act will be determined by reference to the policies set out in the NPS and consequently the policy basis on which any nationally significant energy project is determined is now over a decade old. The venerable status of the NPS is particularly acute when one considers the speed at which the Government’s energy policy is changing in light of external pressures from factors including COP-26.

The Government published its widely anticipated Energy White Paper at the end of 2020, which was the cornerstone of the Government’s vision for its transition to clean energy by 2050. In it, the Government also committed to review the current NPS to achieve consistency with the White Paper and deliver a refreshed infrastructure policy framework for the transition to net zero.

The review, which focusses on five out of six energy NPS (EN-1 to EN-5) has now taken place with new draft statements published by the Department for Business Energy and Industrial Strategy on 7 September 2021 at the start of a public consultation process to run until 29 November 2021. The review and consultation focusses on all elements of the energy network – from fossil fuels, renewables, emerging technologies and electricity networks infrastructure. Whilst it does deal with small modular reactors as an emerging technology, nuclear is left well alone until the current EN-6 for nuclear generation expires in 2025.

Overarching Policy Requirement

EN-1 retains its status as the overarching “umbrella” statement, under which the other technology specific energy NPS sit. The revised EN-1 continues to set out the case for development of energy projects and the delivery of these technologies remains “urgent” to provide security of supply, affordability for stakeholders, resilience in the system and flexibility to adapt to emerging technologies. This flexibility is achieved by requiring that EN-1 will act as the policy statement for certain types of energy infrastructure in circumstances where no technology specific NPS has been designated – such as carbon capture and storage (CCS), hydrogen and for the time being, modular reactors. EN-1 will also have effect in relation to infrastructure that is directed by the Secretary of State under s35 of the 2008 Act.

Carbon Capture Storage

The revised EN-1 provides policy support for CCS infrastructure and recognises it will be needed to ensure the transition to a net zero economy, with the UK having one of the largest European storage capacities underneath the UK continental shelf. CCS is also credited as being essential for the development of low carbon hydrogen to diversify the nation’s energy supply - particularly in the transport sector.

There appear to be no technology specific or environmental assessment principles set out in the revised EN-1 which would be important and relevant considerations for the determination of a CCS energy project application.

Hydrogen

The revised EN-1 also strongly supports the need for hydrogen produced either through low carbon methane reformation with CCS (blue hydrogen) or water electrolysis (green hydrogen). The Government is targeting a 20% blend of hydrogen into the current natural gas distribution networks by 2023 and 5GW of low carbon hydrogen capacity by 2030. We predict a major upscaling of hydrogen development over the coming years.

Fossil Fuels (EN-2)

Although policy support for large scale coal and oil fired power stations is proposed to be withdrawn, with the Government confirming that “it is taking active steps to phase them out of the energy system”, there is an acknowledgement that gas combustion power plants may still have a role to play in peaking capacity in the short term and whilst low carbon alternatives are phased in over time.

Renewables (EN-3)

Solar

It is quite clear that solar is one of the key beneficiaries under the revised NPS. Policy support for large scale commercial solar projects has now been greatly expanded under the revised EN-3, largely due to a 98% reduction in capital cost creating viable subsidy free opportunities to deliver solar at scale. The decommissioning of coal and oil fired power stations has also created connection capacity to allow for large scale deployment of cost efficient and quick-to-construct renewables like solar. The revised NPS also provides welcome clarification on capacity thresholds for solar projects, addressing the historic disparity between measuring solar thresholds by reference to their direct current (DC) output rather than on an alternating current (AC) basis. This correction provides welcome certainty to the industry and will encourage greater access from new market entrants. We predict a major increase in solar projects, which can already be seen across the Planning Act 2008 regime, with the first solar DCO granted in May 2020 and a further dozen projects at pre-application stage.

Wind

The policy support for offshore wind projects has been further strengthened with express reference to the 40GW target for offshore capacity – and 1GW of floating wind – by 2030. We have already seen a significant number of offshore wind projects successfully promoted through the NSIP system however the case for offshore wind has been further strengthened, adding resilience through the prospect of Tidal Stream projects above 100MW within the next 5 years. There is also a significant amount of new guidance on the Crown Estate cable route protocol, marine planning, co-ordinated offshore transmission and environmental considerations.

All references to onshore wind have been removed as these projects are now considered under the Town and Country Planning Act 1990 Act.

Tidal Stream

The revised NPS acknowledges that tidal stream is at an early commercial stage and may not be financially viable in comparison to other technologies, however we may see a greater role for tidal stream over the next 5 years. There is also a limited evidence base related to environmental impacts including underwater sound, seabed habitats and on distribution of marine species caused by tidal stream energy projects. Existing tidal stream developers – of which the NPS notes there are at least 21 – may be particularly interested in contributing to the consultation to inform the assessment of impacts as these projects become more widespread and financially viable. Tidal range generation, such as through tidal lagoons or barrages, is not addressed so would fall to be covered by NPS EN-1.

Pumped Hydro

Whilst pumped hydro storage replaces hydroelectric power generation, to the extent that any hydroelectric projects were to be promoted these would be by reference to the policy support for pumped hydro storage. Whilst it is acknowledged that pumped hydro storage is not a net generator of electricity as any power generation must subsequently be balanced by consumption to return the water to the upper reservoir, these projects are useful to the electricity grid to correct imbalances in electricity supply and demand.

Biomass and Waste Combustion

Very little has been added to EN-3 in respect of biomass and waste combustion. The key changes are updating the policy statement in respect of air quality legislation and to require that all biomass generating stations are carbon capture ready and/or have carbon capture storage technology applied.

Electricity Networks (EN-5)

The revised EN-5 includes a number of proposals affecting the deployment of electricity network infrastructure which includes transmission systems (400kV and 275kV lines) and distribution systems (132kV to 230v from substations to end users) either tower/pole mounted or undergrounded. It also includes associated infrastructure such as substations and converter stations.

The presumption on pylon supported overhead conductors for new electricity lines is reversed in national parks and AONBs where new lines should be undergrounded unless the harm outweighs the landscape and visual benefit. This would represent an important point of clarity for promoters and stakeholders alike. The Holford Rules on the routing of electricity lines are incorporated in the draft NPS.

Land ownership - i.e. the use of easements - is “strongly preferred” over wayleaves which, while reflecting the importance of the infrastructure to the nation’s net zero ambitions, may tend to increase the capital cost of projects.

There is clear policy recognition for the opportunities that linear infrastructure has to create habitat corridors, biodiversity stepping zones, the re-establishment of hedgerows and other biodiversity enhancements, which is particularly relevant given the Environment Bill’s proposed requirement for NSIPs to comply with biodiversity net gain targets.

The Horlock Rules for the design and siting of electricity substations and other assets is proposed to be formally recognised in policy.

There is also a clear recognition in policy for a “substantial” amount of new onshore network infrastructure required to support the scale of offshore transmission infrastructure, including network reinforcement and upgrades to existing apparatus.

Conclusion

For any DCO applications accepted for examination before designation of the amendments to the NPS, the original suite of NPS will have effect. The revised NPS will only have effect in relation to those applications for DCO accepted after the designation of the revised NPS. However, Promoters of applications submitted before the changes take effect should assess their project against the draft policies in the revised NPS as well, as they will still be important considerations in decision making.

This consultation process offers a significant opportunity for market stakeholders to influence the policy landscape of energy projects over the next decade and beyond. The emphasis on the revised NPS has been centred on achieving maximum flexibility for emerging technologies to ensure security of energy supply and innovation and the scale to deliver low carbon electrification across highly carbon-intensive industries.