National Audit Office: DESNZ plan needed urgently to speed investment and co-ordinate transition

Without a critical path bringing together different aspects of power decarbonisation the Department for Energy Security & Net Zero (DESNZ) risks failing on its ambition or imposing unnecessary costs on taxpayers and consumers, the National Audit Office (NAO) has warned in a new report, Decarbonising the Power Sector.
Describing decarbonised power as the “backbone” of the government’s Net Zero planning, the NAO warned DESNZ not to be complacent about the challenges involved in continuing the process while ensuring a secure supply as electricity demand increases. It said “This will require substantial investment in new capacity, alongside system-wide modernisation, and needs a joined-up approach to ensure changes happen in sequence and with coherence.”
But DESNZ plans for a draft of its delivery plan with key decision points, risks, mitigations and interdependencies were derailed because by the need to respond to recent record-high energy bills.
The report says a step change is needed in private investment and the pace at which new generating capacity is built, with offshore wind, solar and nuclear power deploying faster than have been achieved before. That requires a clear delivery plan to maintain investor confidence and reduce their costs of capital. It also requires government to increase its planning and coordination of the power system. It says “industry stakeholders are increasingly concerned” about the lack of a government delivery plan that brings different aspects of power together.
Now the NAO says DESNZ should:
• Establish how it will ensure the system is resilient to prolonged periods of
low generation from renewables, include considering the potential costs and benefits of maintaining some carbon-emitting power generation
• Review plans for achieving its ambitions for offshore wind and nuclear power expansion within the next year and if they are unattainable it should develop alternative options, such as investing in demand-side flexibility;
• Ensure it has understood the main links between different aspects of decarbonisation and sets out how these will be managed. This should include how to determine the best sequencing of changes and investment, such as ensuring how network capacity keeps pace with expanding generation.
To assess progress, it should:
• Review the capability of its modelling to refine and update the most cost-effective system-wide approach to achieving net zero, including power sector decarbonisation. Where it identifies gaps DESNZ should consider alternative sources of information.
• Establish a set of clear measures of overall progress and interim milestones and report progress annually to Parliament.
• Establish arrangements to understand and respond to system-wide risks and opportunities, to ensure its plan is resilient, including having an overview of the cumulative demands on workforce, materials and investment.
Download the report here