The Great British Energy Bill is likely to be the biggest market disruptor to the UK energy sector in decades. Whilst it has received a warm welcome and excitement from industry professionals and the public alike, it has also been met with a great degree of concern and uncertainty, due to a lack of detail provided.
The government has committed to the UK becoming a ‘clean energy superpower’ by 2030. The Bill’s intention is to help the UK achieve energy independence and increase investment in renewable energy infrastructure.
The Bill will enable the establishment of Great British Energy (GBE), a publicly-owned company whose aim will be to invest in UK-based clean energy projects, that will create a more affordable power source in the UK too.
In collaboration with this bill, the government has also announced a partnership with The Crown Estate, whose land and seabed portfolio, clean energy expertise and existing projects, as well as new investment powers – enhanced by the new government – will also play an essential role in accelerating delivery of clean energy.
In addition, the government has increased its budget to a monumental £1.5 billion for its renewable energy auction this year, extended the windfall tax, as well as established other pockets of investment – for example the National Wealth Fund – to get new windfarms and solar projects off the ground.
This could be a pivotal turning point for the industry bringing new opportunities and challenges.
Labour’s tough stance on oil
© Supplied by DCTFor example, the oil and gas sector has already seen tougher regulatory and tax conditions which has directly impacted their investment strategies into renewable technologies.
Whilst some oil and gas companies still have the resources to fully explore and diversify into renewable projects others won’t be able to invest as much and may struggle to survive.
The previous government’s windfall tax extension to oil & gas producers has already led a number of oil and gas projects in the North Sea to be delayed or indeed cancelled.
The new Labour government’s plan to increase tax to 78% will make it even harder for smaller players. All against the backdrop of banks lowering their investments in UK oil and gas projects.
This could have a detrimental impact on the government’s new plan, with the availability of supply chains and required jobs decreasing due to companies unable to survive.
It is hoped that GBE will support those smaller companies looking to make the clean energy transition, with their vow to create a new supply chain to complete the clean energy transition, but for now, the future is unknown.
Lawyers are ‘lawyers scratching their heads’ over GB Energy
© Supplied by Pinsent MasonsThe lack of legislative detail has had lawyers scratching their heads as to how GBE will achieve what it has been set up to do.
With the Bill being at the second reading stage in the Commons, it will be a while before we understand the full scope of it. But that doesn’t stop demands, new concerns and pressing questions from businesses in the sector who will be looking to their in-house lawyers to determine what the Bill means for them, how it can be used for innovation and their advantage, but also how the risks to their business can be minimised.
To visualise – many energy businesses will have been asking their in-house legal teams the following questions: how can they prepare?; How can they benefit from GBE?; How could they lose out?; How can they remain profitable within the new regulatory environment?; How easy could it be to start up new renewables projects under the GBE bill?; How do they retrain, re-diversify and restructure their workforce?; What will this mean for their supply chain?
In-house legal teams have had increasingly tight budgets, due to operating in a globalised regulatory environment and the commercial drive (across most sectors) over the last decade for them to be profit-driven centres.
With this transition expected to come at a great cost as well as create a great opportunity to many businesses in the energy sector, the legal workload will also grow.
This will be in addition to the usual day-to-day demands on the business, and legal teams will need to find effective ways in which they can source renewables expertise, whilst ensuring they stick within budgets.
Law firms build out renewables expertise
© Supplied by Pinsent MasonsSo how can in-house lawyers prepare their teams to guide their business? The good news is that in recent years there have been an increasing number of lawyers specialising in renewables work in private practice due to increasing sector demand, in onshore and offshore wind, solar and battery storage.
However, many more are needed. To help with the demand for these new skillsets, a number of bigger law firms, have even started training generalist energy flex lawyers with renewables skills to assist with market demand.
Solutions such as flexible legal provision can be tapped into by in-house legal teams to manage the impact and drive innovation, in a more cost-effective and value-driven approach.
For example, renewable specialists that can be parachuted in to prepare for the introduction of GBE and its impact will generate value, and doesn’t require the same level of financial investment and time as a regular employee.
As the introduction of the GBE bill demonstrates, with every new opportunity, there is also uncertainty, and in-house legal teams in energy firms need to be on the front foot to support their business through this energy transformation.
Considering what cost-effective resources can be brought in to support during this time will put in-house legal teams in good stead for when more detail is released on the new law later this year.
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