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Quick take on the Spending Review and National Infrastructure Strategy

Robert Buckley Robert Buckley Head of Relationship Development
25th November 2020

Fresh from last week’s 10 Point Plan for a Green Industrial Revolution and yesterday’s 2021 CFD auction plans, the Treasury has earlier today issued its Spending Review 2020 and alongside the much-anticipated National Infrastructure Strategy (NIS).

Both flesh out the commitments made in the 10 Point Plan and, in the National Infrastructure Strategy, confirm some of the key thinking on policy which will shape in the coming years the energy and many other sectors. From a quick read so far, the Spending Review by and large confirms and quantifies the short-term commitments on energy efficiency, clean technology and carbon capture and storage that were set out in the Plan.

The National Infrastructure Strategy confirms the government’s adoption of many recommendations from the National Infrastructure Commission (NIC). In his foreword to the document the Prime Minster referenced the NIC’s “outstanding work”. The PM also claimed that the Strategy “fully reflected” the 10 Point Plan and, referencing the private investment needed in energy, water and telecoms, committed to “ reduce policy uncertainty that holds back investment and create a new national infrastructure bank to co-invest with private-sector partners”.

The new infrastructure bank is perhaps the eye catching feature of the NIS, but there are plenty of other ideas that will reshape the energy sector if they are taken forward. A few of them, beyond the commitments from the 10 Point Plan, and in no particular order are:

  • The adoption of the NIC’s recommendation that the next auction round for Contracts for Difference (CfD) in 2021 to include onshore wind and solar PV.
  • “The government will review the right long-term role and organisational structure for the Electricity System Operator”
  • 2 year CfD auctions where “the government will ensure that total system costs are considered … as far as possible and will publish a call for evidence on the evolution of the CfD regime”
  • On scale new nuclear “alongside considering the Regulated Asset Base model the government will also continue to consider the potential role of government finance during construction, provided there is clear value for money for consumers and taxpayers”
  • "The Energy White Paper will set out the government’s approach on the overall governance of the [energy] system”
  • "The government will outline onshore network [sic] in the forthcoming Energy White Paper, including plans to legislate to introduce competition".

Keep an eye out on our website in the coming days as we post further comment and reaction. Our Research Partner, Dan Atzori will give his detailed take in next Monday’s issue of our weekly Energy Spectrum bulletin.