Key energy takeaway's from the Queen's Speech

The Queen's Speech delivered on 10 May 2022 announced a new energy bill (the "Bill"), which expands on the UK Government's Energy Security Strategy, announced in April 2022.

The Bill aims to reduce the UK's exposure to the volatility of global gas prices, focuses on developing an energy system based on renewable energy and low carbon technologies and builds on the COP 26 Summit initiatives.

The key proposals of the Bill include:

• Extending the price cap: The Bill will extend the energy price cap beyond 2023. The price cap was increased by 54% in April 2022, driven by high gas prices, which have increased significantly during 2021 and more so as a consequence of the Russian invasion of Ukraine and related sanction measures.
• A focus on decarbonisation: The Bill includes plans to increase investment in growing the consumer market for heat pumps, which factor into the UK government's plans to reach net zero. The government will look to set a new market standard and create a trading scheme, which intends to help support innovation and help lower the cost of heat pumps over time. The Bill will also appoint Ofgem as the new regulator for heat networks in an effort to ensure consumers get a fair price and a reliable supply of heat. This will enable the first-ever large-scale hydrogen heating trial, which will inform the role of hydrogen in heat decarbonisation in 2026.
• Competition in Britain’s onshore electricity networks - The Bill will introduce competition in Britain’s onshore electricity networks, with the hopes of encouraging investment and innovation, through which consumers could see savings of up to £1 billion by 2050 on projects tendered over the next ten years.
• Establishing a new Future System Operator (FSO) – The Bill proposes the establishment of a new FSO tasked with strategic oversight across electricity and gas systems. The FSO is intended to look at Great Britain’s energy system as a whole, integrating existing networks with emerging technologies such as hydrogen and providing strategic oversight across both the electricity and gas systems.
• Nuclear- The Bill will create a regulatory framework for fusion energy, and will allow for the safe and cost-effective clean-up of the UK's legacy nuclear sites to ensure that the UK is a responsible nuclear state
• Carbon Capture Usage and Storage - The Bill will introduce new business models for Carbon Capture Usage and Storage (CCUS) transport and storage, as well as low carbon-hydrogen and industrial carbon capture. This follows the release of the government’s hydrogen strategy in August 2021, which outlined a target of 5GW of low carbon hydrogen production capacity by 2030. The Bill aims to reduce the risk of fuel supply disruption by giving government powers to direct, require information from and provide financial assistance to core fuel sector businesses.
• The Levelling Up and Regeneration Bill - the Queen's Speech also provided details on the Levelling Up and Regeneration Bill, which was introduced to parliament on 11 May 2022 and aims to reform the planning system in Britain, which is vital for hitting the UK’s target of 50GW offshore wind by 2030.

The Bill will include a number of proposals to facilitate investment in the infrastructure necessary to achieve the Government's decarbonisation objective. In doing so, it builds on the commitments in the British Energy Security Strategy (see our briefing here) and the Ten Point Plan for a Green Industrial Revolution (see our briefing here). However, many of the key details are as yet unclear – it is a case of "watch this space" as the Bill will be presented fully in due course.