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The Energy Act 2023 (the “Act”), which received Royal Assent on 26 October 2023, marks a significant milestone in the UK’s energy sector. The Act aims to strengthen the UK’s commitment to a greener future and help meet its ambition of energy independence and net zero obligations. The UK Government has stated that the introduction of the Act will ‘help unlock £100 billion private investment in energy infrastructure and scale up jobs and growth’.
Introducing a multifaceted approach to energy reform, the Act addresses the need for a transition to cleaner energy sources. What’s really exciting is that it provides the framework for the development and integration of renewable energy technologies, the improvement of energy efficiency and provision for the future of energy production and consumption in the UK.
A key element of the Act is the emphasis on carbon management, including measures to promote the capture and storage of carbon dioxide and a legal framework for the growing hydrogen industry. This is complemented by the support for renewable energy sources, such as wind and solar, which are set to play an ever increasing role in the UK energy sector. The Act aims to streamline processes for the development of these technologies, making it easier for new projects to get off the ground.
With a key focus on energy efficiency, both in terms of production and consumption, as well as the rights of consumers, the Act sets out measures such as extending the powers of the smart meter rollout to 2028 to ensure that homes and businesses in the UK are more energy-efficient, in addition to consumer protections that emphasise access to sustainable energy options and fair pricing.
Fundamental to the Act are regulatory reforms, with new provisions aimed at making the energy market more flexible to change. These reforms are designed to encourage innovation and competition, while also providing certainty for investment in new energy infrastructure.
By establishing entities, such as Great British Nuclear, the Act indicates a clear role for nuclear energy in the UK’s future energy strategy. Additionally, the Act acknowledges the potential of emerging technologies, including advancements in smart grids and energy storage, which are vital for managing renewable energy sources.
Business owners need to be aware that the Act sets out a number of regulatory, licencing and compliance requirements, including with regard to carbon dioxide storage and transport and the supply and management of heat energy. This will likely result in necessary updates to infrastructure and systems to meet the new standards and avoid any potential penalties.
The Act also provides an opportunity for investment and innovation and allows for government backing in the form of financial support for clean energy initiatives. This will help businesses within the sector to mitigate financial risks that would normally be associated with innovative technologies and presents an opportunity for companies to emerge as forerunners in these fields.
Overall, the Energy Act 2023 sets a clear direction for the future of energy in the UK. Businesses should feel encouraged by the real potential for growth and innovation and as the Act is implemented, it will undoubtedly help to shape the economic, environmental, and social landscapes of the UK towards net zero emissions and a more sustainable energy economy.
This article has been produced for general information purposes and further advice should be sought from a professional advisor. Please contact our Energy and Renewables team at Cleaver Fulton Rankin for further advice or information.