As anticipated, the Energy Price Guarantee (EPG) has been extended for another three months, so the average household will pay no more than £2,500 a year. The price cap was due to rise to £3,000 from April 2023, and the change will cost about £3bn. From July, the premium on prepayment meters will also be removed for over four million poor households which are charged more for their gas and electricity.

Greg Jackson FEI, Vice President of the Energy Institute (EI) and CEO/Founder of Octopus Energy, said the extension was a ‘huge relief for millions of customers’ and ‘was vital not only for households but also for the economy and tackling inflation’. He recognised that wholesale costs are falling but noted that ‘they are still significantly higher than normal levels’.

Fuel duty was frozen for the 12th year in a row as the Chancellor cancelled a planned 11 pence increase, estimated to save drivers about £100/y. The move will cost the government £6bn. Gordon Balmer, Petroleum Retailers Association Executive Director, welcomed the government’s commitment ‘to keep fuel duty under review’, recognising that petrol and diesel prices are ‘still extremely volatile’ due to the ongoing war in Ukraine.

In his Spring Budget, Hunt acknowledged that: ‘The transition to net zero is essential to long-term prosperity.' With this in mind, he promised up to £20bn of funding over two decades to support carbon capture, use and storage (CCUS) projects and new small modular nuclear projects ‘as another plank of our green economy’. A shortlist of projects for the first phase of CCUS will be announced later this month. Further projects will be able to enter a selection process for Track 1 expansion this year, and two additional clusters will be selected through the Track 2 process to be announced shortly.

The government is also launching Great British Nuclear to address constraints in the nuclear market and support new nuclear builds in the move towards net zero. As mentioned, there will be a focus on the development of small modular nuclear reactors. Hunt suggested that more funding could be available if they were shown to be viable, through a new competition open to both domestic and international vendors, to identify the best designs by then end of this year.

Nick Wayth, Chief Executive of the EI, welcomed some of the new initiatives but felt the budget could have gone further to stimulate the green economy. ‘Today’s announcements are welcome for the immediate relief for consumers facing the effects of volatile world energy markets, as well as for the long-term commitment to the larger infrastructure needed to build a resilient and clean energy system.’ He added: ‘Alongside the long-term development of CCUS and new nuclear mentioned today, we must not let up on improving the energy efficiency of our leaky homes, the deployment of cheaper and immediately available renewables, and infrastructure needed to electrify transport and home heating,’ he remarked on Twitter.

Response to the budget came thick and fast with a mix of appreciation and criticism from those favouring a faster track approach to the energy transition.

RenewableUK called for much bolder action. ‘Today’s budget does not create the framework needed to mobilise investment and turn the UK into a clean energy superpower,’ remarked Ana Musat, Executive Director of Policy and Engagement at RenewableUK. ‘It will not enable the renewable energy industry to build vital new projects much faster or grow supply chains.’ Although she welcomed the increase in capital allowance rates, she noted: ‘This only lasts for three years and will do little to attract long-term investment.’

Indeed, Helen Nicholson, Tax Director in Renewables at PwC, pointed out: ‘The eye-catching 100% allowances for capital expenditure (capex) will no doubt be designed to improve global competitiveness for renewable developers faced with the headwind of the increased corporation tax and the Energy Generation Levy. However, given that many energy generation projects are not profit-making in their early years, it will be interesting to see whether this sufficiently redresses the balance.'

Phil Smyth-Tyrrell, Head of Wind at environmental consultancy Ramboll UK, welcomed the Chancellor’s recognition of green energy needs, but also felt that ‘more tax breaks for energy infrastructure investment are desperately needed’. He maintained: ‘I would have liked to have seen more from the government to react to the threat of cost escalation dampening or killing offshore wind capex projects.’

Disappointment was also expressed by legal firm Akin Gump partner Matt Hardwick, who remarked: ‘It was surprising to see no pledge from the Chancellor to support the build out of electric vehicle battery manufacturing capacity in the UK… since the UK risks its supply requirements being exported and with it the associated value, jobs and skill creation opportunity.’

On the positive side, Lily Frenchman, CEO of the Association of Decentralised Energy, appreciated the Chancellor’s roll-out of a new financial support package for those on heat networks, alongside extension of the EPG. And looked forward to zero carbon networks becoming ‘a mainstream way of heating buildings in the UK’.

Overall there was a suspicion that the UK Chancellor had simply played it a bit too safe given the impetus on green investments of the Inflation Reduction Act (IRA) in the US.

Ben Morris, Energy, Infrastructure and Environment Partner at audit, accounting and consulting group Mazars, expressed discontent that: ‘While the Chancellor has put some attention on renewables and green energy in today’s Budget, overall these are unlikely to lead to significant changes on their own to the number of new green energy projects being deployed, or to the investment plans of businesses. Those who are looking at increasing investments in the US in response to the IRA are unlikely to be swayed by today’s announcements.’