Britain’s potential 50 GW of offshore wind energy could light up all of the UK homes several times over, while Scotland’s wind farms are being paid to be switched off due to the overproduction of power. This stark contrast of the reality that the UK is facing today brings about the question of what is stopping us from achieving our net zero target by 2050? Our resources. Our lack of electrical engineers in the labour market, who understand how to connect sustainable energy technology to an outdated grid, which dates back to the 1970s. If these supply chain inefficiencies prolong, then the hindering of the UK’s energy transition from fossil fuels to renewable energy, may materialise consequences which will impact future economic sustainability goals. However, it is also important to acknowledge that this isn’t simply about a lack of funding for new-generation projects or policy constraints – it is about a systematic failure to modernise the backbone of energy transition.
Infrastructure
The net zero by 2050 goal set by the UK government challenges economic growth through encouraging sustainable development – particularly a reduction in greenhouse gas emissions, requiring a switch to a renewable energy system. The main sources of renewable energy in the UK are wind, solar, hydroelectric, and bioenergy, which all require specific locations and conditions in order to operate most adequately. This scattered image of energy technology requires multiple connectivity routes and energy flows into the national grid to be able to transport energy all across the country. Nevertheless, our current power grid was designed for a one-way, centralised flow. The grid’s 1960s analog technology is simply not equipped for the flexibility requirements of transitory renewable energy sources and the lack of investment and planning delays have constrained development of the national grid to a more suitable model, which would allow us to transition to a more sustainable energy system. Therefore, this means that the rise of power needing to flow both to and from consumers, due to the distributed solar panels and wind farms, is overloading grid circuits and resulting in wind farms being paid £250 million, in just 2023, to be switched off due to energy congestion, whilst this money could be allocated towards greater funding of clean energy. The opportunity cost of this spending allocation is further entrenching the very bottlenecks that initially caused the problem.
Labour Shortage
However, no matter how much is invested in renovating the grid’s infrastructure, one key ingredient still remains unobtainable. A critical shortage of skilled engineers who know how to put the pieces together, leaving green projects stalled. Roughly 20% of workers in the UK’s energy sector are predicted to retire by 2030, leaving a massive gap of decades of skills and knowledge that is unable to be filled due to the unattractiveness of the power industry to the younger generation, as more and more STEM qualified talent is being lured into other competing sectors. The scale of this labour deficit is staggering and the National Grid has estimated that we are in need of 40,000 new energy jobs by 2050, and 29% before 2030 in order to stay on track with the 2050 Net Zero goal. This labour shortage is a perfect example of the fundamental mismatch between the economy we are trying to build, and the workforce that we have prepared to achieve this. The engineering talent pool contains a broad range of different specialties, which aren’t particularly interchangeable, and unfortunately, our country’s ambitious goals may have underestimated the structural flaws in the factors of production required for our transition – creating structural unemployment. Having said that, the number of clean energy job vacancies have been rising in recent years, due to the government’s drive towards this sector, in all parts of the UK, showing great promise for increased employability if the barriers to training are removed. The high costs to firms of training workers and the lack of teachers and staff availability conveys that much larger provision and subsidising is required by the government in order for firms to deal with this labour gap – with this being especially prominent for SMEs (Small and Medium sized Enterprises), where there’s more of a limited capacity of resources.
Current policies
So, what is currently being done in an attempt to put the UK back on track to achieving its sustainability goals? The government has been implementing multiple key levers, including fiscal policy and regulation reforms.
The Research and Development tax regime has been supporting the UK in its development of clean energy projects by providing tax relief on qualifying expenditures, with up to 26.97% for SMEs. Innovation is a key element for progression in the energy sector, therefore, due to the large scale of these projects, this scheme has acted as an incentive for firms to invest in sustainable technology in order to be eligible for these profit-maximising benefits. However, its impacts on the renewal of the grid are limited. This is due to a lack of prioritisation for projects which are deemed as essential for renewable energy integration by the National Grid, making the R&D tax relief less strategic.
More recently, a new onshore wind plan has been launched by the government, consisting of over 40 action points to ‘revitalise’ the building of onshore wind farms after the de-facto 9-year ban in England, which significantly staggered the planning and building for nearly a decade. Alongside the investment on improving supply chains and existing wind farms, this strategy has also been estimated to increase the onshore wind workforce by the creation of 45,000 new jobs by 2030 across different skill levels and occupations – helping to improve the mismatch of skills in the UK labour force.
And Overall
Overall, with less than 25 years left to decarbonise all the sectors of the UK economy, heavy investment and urgent planning are required to connect and fill the gaps between education, wage, innovation, and physical infrastructure. While more and more policies are being enforced and reformed to better support this energy transition, they remain only fragments of solutions to a systematic failure, which requires a more structured approach. For this, a deeper focus is required on the transmission of power by the national grid and on improving the appeal for the energy sector to the younger generation to increase participation in this workforce. Otherwise, the inability to reach clean energy goals poses various long-term consequences to the UK’s economy and society, consisting of vulnerability to volatile fossil fuel markets and a widening skills gaps in the UK compared to other countries, leaving us less globally competitive.
