Draft Contracts for Difference (Sustainable Industry Rewards and Contract Budget Notice Amendments) Regulations 2026

Michael Shanks Excerpts

Tuesday 17th March 2026 General Committees

[The Minister for Energy (Michael Shanks)]

I beg to move,

That the Committee has considered the draft Contracts for Difference (Sustainable Industry Rewards and Contract Budget Notice Amendments) Regulations 2026.

It is a pleasure to serve under your chairship, Ms Jardine, and it is wonderful to see so many Scots reunited for this debate. The draft regulations were laid before the House on 5 February; I should say from the outset that they still carry the legacy name of this policy, although it is now known as the clean industry bonus. I will briefly set out three things: first, the purpose and direction of the clean industry bonus; secondly, how the draft regulations help us to evolve the contracts for difference scheme; and thirdly, why funding under the scheme is now conditional on applicants adhering to the fair work charter, which I will come to in a moment.

First, the purpose of the statutory instrument is to amend regulations governing the clean industry bonus ahead of allocation round 8. As I am sure Members are aware, the contracts for difference scheme is our main renewable energy support mechanism. The clean industry bonus offers additional CfD revenue to offshore wind developers who invest in UK factories and ports needed to deliver offshore wind, driving investment in our industrial heartlands. Offshore wind developers have rightly prioritised reducing costs, but the CfD scheme was missing a mechanism to ensure that investments went back into the UK, and to cleaner factories, so that consumers got both clean power and local jobs. That goes to the heart of this Government’s mission to deliver not only clean power but our industrial strategy.

Funding under the clean industry bonus is allocated through a competitive process that is run ahead of the main CfD round, with awards given out for the best value investments in the UK or for cleaner supply chains. Payments are released only on delivery of those commitments.

In the most recent allocation round 7, £204 million was allocated through the clean industry bonus, which crowded in £3.4 billion of private investment—that is £204 million for £3.4 billion of private investment into supply chains and ports in the UK, delivering a strong return on public investment. The scale of private investment leveraged by the clean industry bonus represents an unprecedented vote of confidence in the UK’s supply chains, compared with previous allocation rounds.

Let me set out the direction of travel in the draft regulations. The aim is to make targeted, practical improvements to the operation of the scheme for allocation round 8, such as simplifying the application process and clarifying how budgets and delivery rules operate. The draft regulations also provide a legislative basis for making the subsidy conditional on fair work, ensuring that investments come with a commitment to good-quality jobs. The aim of the scheme’s operational improvements is to speed up the process and reduce the administrative burden by diminishing the volume of paperwork required, as well as clarifying budgets and rules, such as if events outside an applicant’s control derail their project. The draft regulations also set a sunset clause on the scheme, meaning that no CIB can run after 31 December 2028 without further parliamentary scrutiny.

In the coming allocation round, we are also thinking beyond just offshore wind; the scheme will be extended to onshore wind projects in allocation round 9, and the regulations have been amended to make that possible. The period before introduction will give industry a small amount of lead-in time to get ready. Taken together, these changes improve and widen the scheme, as we speed up the delivery of renewables.

Thirdly, on fair work and skills, the most significant change in allocation round 8 is that clean industry bonus applicants will need to sign up to the offshore wind fair work charter, which is a series of commitments to improve worker voice and representation and health and safety in the offshore wind industry. If an applicant wants to apply for the subsidy, they will have to sign the charter. This was designed by industry and trade union representatives, and it reflects their constructive engagement. I thank the representatives from both the industry and the trade unions, who engaged constructively in pulling this together.

The purpose is very simple: if we are going to give public money, it should help to improve the quality and security of jobs in the offshore wind industry. It will mean that workers and communities across the country reap the rewards of offshore wind and that the sector becomes an even more attractive place to work amid fierce competition for skills. The charter builds on forthcoming commitments in the Employment Rights Act 2025, in particular by asking that the offshore wind sector proactively implement voluntary access agreements for trade unions. It also includes a commitment to strive for best practice health and safety standards that go beyond the legal minimum.

Our commitment to good jobs through the clean industry bonus does not stop at the fair work charter. We are pressing ahead with a skills investment fund that will help develop the skills needed for the clean energy transition. The idea is that offshore wind developers pool together skills funding and initiatives, rather than relying on individual projects trying to address particular short-term needs. The Government and the offshore wind industry have agreed that they will work together to set that up by 2027; that will be funded by existing developer contributions to the supply chain, not by any new money. Once that skills and investment fund is up and running, developers may be asked to contribute to it as a condition for taking part in the CIB and CfD schemes. That way, the bonus can drive improvements in how the offshore wind sector addresses fair work and skills, while continuing to fund UK industrial heartlands.

As I have set out, the regulations build on the strong foundations achieved in allocation round 7. They ensure that the clean industry bonus continues to drive supply chain growth in support of clean home-grown power. They make targeted improvements to the operation of the scheme and, crucially, ask that public funding supports public goods such as fair work and investment in skills. Taken together, the measures support the Government’s mission to make Britain a clean energy superpower, to lead in producing affordable clean energy and to support the creation of good jobs right across the country. I commend the regulations to the Committee.

--- Later in debate ---

[Michael Shanks]

I will address a few things. There were some contradictory comments from different Members of the same party: on the one hand, we should support the supply chains, but on the other, the Government should do nothing to actually build them up. I will come to that point, because—

[Kit Malthouse]

We think for ourselves.

[Michael Shanks]

That is how we end up with absolutely no industry left in the country. That is what we are trying to rebuild after 14 years of it falling apart.

I will turn to the specific points. First of all, the shadow Minister, the hon. Member for West Aberdeenshire and Kincardine, made a good point about the strength of supply chains in the north-east of Scotland; I will be in Aberdeen again on Thursday. One of the key things that the North Sea Future Board has taken as a real priority is how we map those supply chains, not just over oil and gas but over what could come in terms of offshore wind, decommissioning, hydrogen and carbon capture. For too long, the pipeline of future projects that that supply chain could be redeployed on has not been clear enough. As a result, we have been losing out on contracts that could be dealt with here in the UK. We are determined to try to fix that, because there are significant supply-chain opportunities, but we need to make it easier for companies to take those up.

The shadow Minister and I always agree on new nuclear, although we slightly disagree on how much he achieved when he was the Nuclear Minister—but I will not mention that, because I want us to work co-operatively on nuclear. New nuclear is incredibly important. As he is right to say, the supply-chain benefits in the UK from nuclear are substantial: thousands and thousands of jobs in communities right across the country, not just in proximity to Sizewell or Hinkley, are contributing in different ways to building what are phenomenal engineering projects here in the UK.

The small modular reactor fleet that the Government not only consulted on but have actually delivered—and are delivering—will result in even more supply-chain jobs across the country as well. The shadow Minister and I also agree that we would like to see some of those SMR projects being built in Scotland, with even closer supply chains in Scotland as well, but we first need to change the Scottish Government in May; I am glad that he will be supporting a vote for Scottish Labour on 7 May to do that.

The shadow Minister also raised a number of other points about the supply chain that I think are right. It is absolutely right to say that floating offshore wind is an expensive technology, but we are at the cutting edge of its development. We have a real opportunity to do something differently on deep-sea wind, which we were not able to do on fixed-bottom wind, to have the supply chain here in the UK. We have the biggest pipeline anywhere in the world; we have one of the biggest projects in the world. That is an opportunity for us to deliver on that innovative supply chain, but it takes investment for that to happen.

The right hon. Member for North West Hampshire asked a number of genuine questions, which I appreciated. First, the regulations themselves very clearly set out the sunset clause as 31 December 2028. This will be eligible for the allocation rounds before that date; if we wanted to continue the scheme beyond that, we would have to come and update these regulations again, but it is not an unlimited fund.

On the projected budget for AR8, I cannot get into projected budgets because they are driven by the initial allocation that is set, and then by the bids that come in. In AR7, we reformed the process so that we could see the bid stack in order to see what projects were in that option round, although they were anonymised. That resulted in the budget getting us the output of offshore wind that we did, at a price that was 40% cheaper than new-build gas. That is what we should hold on to: the AR7 option round was cheaper for consumers than the equivalent would be.

I remind right hon. and hon. Members that there is no option to not build new energy infrastructure in this country. We have two choices: we either double down on gas, and the world as it stands right now is a reminder of why that would be a mistake; or we build renewables. There is no option to build nothing. There is a cost for consumers, regardless of what we choose to do. There is also a huge cost for consumers of building the grid that the previous Government failed to build for 14 years, which we are now determined to do.

On the fair work charter, there is no compulsion on any developers to bid into the clean industry bonus. If they want to participate in the contracts for difference auction, they are very welcome to do that. If they want to participate in the clean industry bonus and have public support for supply chains here in the UK, then they should conform to the requirements of that scheme. We think it is absolutely fair to say that if the hard-working people of this country are putting money into building those factories, fair work should be at the heart of it. I am surprised, frankly, that in 2026 anyone would think that fair work is something that we should not support by any means necessary.

[Kit Malthouse]

As I think I said, I agree that people should be treated with respect; my question was more about why it is being done through this particular route. For the Government to legally have grounds to include what we are discussing as part of, effectively, a procurement process, there has to be a statutory basis on which they are doing that; it cannot just be shoved through on a non-universal basis. I was asking for the authority on which it is included.

I am sorry if I misread the time limits regulation. Could the Minister confirm that, if the Government give notice before 31 December 2028 for 12, 15, 19 or 120 more rounds to come, they will then be able to continue post that deadline? So they can in fact manufacture a deadline.

Finally—rather than my having to intervene again; I hope you will bear with me, Ms Jardine—could the Minister confirm to colleagues what he said: we are being asked to vote today for higher energy bills for our constituents in perpetuity, or certainly for the next few years, as a result of this instrument? Just so everyone is clear: you are voting for higher bills.

[Michael Shanks]

I thank the right hon. Member for his second speech in the debate.

[Kit Malthouse]

I was trying to save time; I can intervene more if the Minister wants.

[Michael Shanks]

I understand the point. First of all, I have been really clear. This regulation, as it clearly sets out, comes to an end on 31 December 2028. We will come back to the Committee to update the regulations should we wish to continue the scheme. We have run AR7—it was a successful scheme. Obviously, we want to monitor what happens in AR8 and AR9. We may be able to devise other schemes. It may be that by then that our industrial strategy has delivered the supply-chain benefits across the UK and that that is not necessary, but supply chains do not come out of nowhere.

The shadow Minister, the hon. Member for West Aberdeenshire and Kincardine, made one other point that I wanted to come back to. When we left Government, two supply chain companies were building solar in this country. When we took back Government in 2024, there were none. If we want to have supply chains in the UK, we have to support and invest in them. That is not just a cost. It also delivers good jobs across the country, and our energy security.

On the question about raising bills, the right hon. Member for North West Hampshire is quite wrong. The outcome of building the clean power system is that we will bring down bills, but we have to be able to build it and that means supply chains here in the UK as well, because the rest of the world is also in a race to build clean energy infrastructure.

[Kit Malthouse]

So is that a yes about voting for higher bills?

[Michael Shanks]

It is a no, because the counterfactual, of relying on gas, as his party is so determined to do, would put up everyone’s bills significantly. We are the ones bringing down bills, and on 1 April all our constituents will see that the decisions this Government have made will reduce their bills by 7%.

There are a number of points in this statutory instrument that I could go over again; in the interests of everyone’s time, I will not. I reinforce the point that we believe that if we are building an energy system for the future here, we should deliver the good jobs and industrial benefits that come with that. That should not be a controversial argument, but it seems that it still is. If we want to have an industrial strategy, we cannot be agnostic, sit on the sidelines and hope that someone else will do it—we have to drive it forward. If we want our constituents to have good, well paid jobs across the country, helping build the energy system, we have to do something about it. This Government are doing that, and I commend the regulations to the Committee.

[Kit Malthouse]

On a point of order, Ms Jardine. I do not mean to be difficult, but the Minister has not answered all the questions I posed—not least about the assumptions of the 16:1 leverage, which is apparently the big bonus coming in. I also do not know whether it is appropriate for us to vote on what is effectively an open-ended budget. Fundamentally, the impact I am most worried about is the one on my constituents—that I am not going to be able to tell them how much this will cost them; that is quite a significant hole in the Government’s argument. I am not aware of other statutory instruments where we vote for an open-ended budgetary allocation that our constituents will have to pay for, whether they like it or not.

I have time this afternoon. If you, Ms Jardine, want to suspend the sitting while the Minister goes and finds the answers to those questions, I am quite happy for that to happen. It seems to me disrespectful for us to rattle through something that will have an impact quite soon on people’s electricity bills.

Fusion Strategy

Michael Shanks Excerpts

Monday 16th March 2026 Written Statements

[The Minister for Energy (Michael Shanks)]

The Department for Energy Security and Net Zero is today publishing “A New Energy Revolution: The UK’s Plan for Delivering Fusion Energy”.

This strategy builds on the Government’s record £2.5 billion investment in fusion research and development secured at the spending review, supporting the UK’s growing fusion industry and reaffirming Britain’s leading position in the global race for fusion energy. We are turning the promise of abundant fusion energy into a reality, as we take long-term decisions while delivering tangible benefits now; for example, we are supporting over 10,000 UK jobs by 2030, driving inward investment, and giving industry the confidence to take fusion from the lab to the grid.

In support of this strategy, UK Industrial Fusion Solutions, to become UK Fusion Energy Ltd, has announced details of the STEP—spherical tokamak for energy production—construction partner that will build the world-leading fusion energy plant on the site of a former coal plant in West Burton in Nottinghamshire. Large-scale construction is expected to start by the end of the decade, with jobs supported in the near term through the building of research and development test facilities for key technologies and site preparation.

We are also harnessing the power of artificial intelligence to accelerate fusion design, modelling, and operations. The Government are investing £45 million to fund the world’s most powerful fusion-dedicated AI supercomputer, developed in collaboration between UK Atomic Energy Authority and the University of Cambridge.

We will drive progress towards fusion deployment by making the UK the first to offer a market framework for fusion energy, giving support and certainty to fusion developers as they make capital-intensive investments in new technology. We will work with industry, consumer groups and others to develop options to provide confidence to investors and ensure a fair deal for consumers.

I fully intend for the UK to be the home of fusion skills and innovation, backed by £50 million for skills development to train over 2,000 people in fusion-related disciplines, from apprentices to postdoctoral fellows, ensuring a comprehensive fusion skills pipeline to supply the sector at all levels.

This strategy underscores the UK’s role as a global player in fusion energy, and we intend to develop that further, anchoring a supply chain in the UK that can serve a global industry, as well as attract inward investment. Our forthcoming investment prospectus will set out exactly where opportunities lie for investors, developers and the wider fusion sector, and what capabilities, skills, companies and support they can draw on. As a signal of confidence in the UK fusion programme, the strategy is accompanied by a set of wider announcements, including UKAEA and Eni agreeing to establish a joint venture to advance fusion energy technologies. This new strategy also sets out for the first time how the Government’s record-breaking investment into fusion of over £2.5 billion will be spent.

Together, this package represents the UK’s clean energy superpower mission in action. It demonstrates that the Government are taking a bold and practical approach, addressing the asks of industry, creating the conditions for a globally leading UK fusion sector, and maintaining the UK’s position at the forefront of global fusion commercialisation.

I will place a copy of the fusion strategy in the Libraries of the House.

[HCWS1404]

Nuclear Regulatory Review 2025: Government Response

Michael Shanks Excerpts

Monday 16th March 2026 Written Statements

[The Minister for Energy (Michael Shanks)]

On Friday, the Government set out their response to the nuclear regulatory review 2025. The review found that while the United Kingdom has a strong safety culture, the current system for nuclear regulation and delivery is fragmented, slow, and overly cautious. The Government accept this assessment and shall modernise the system so that it is faster, clearer and predictable, while at all times maintaining high standards of safety and environmental protection. This is needed to deliver on the ambition we have for both for our civil and defence nuclear sectors.

The response we are publishing today addresses all of the review’s 47 recommendations and sets out a coherent and ambitious plan to streamline nuclear delivery in Britain.

We will simplify regulation. Projects that involve multiple regulators will have a single co-ordinating point of contact through a lead regulator model, with the Office for Nuclear Regulation as the default lead for nuclear fission. We will legislate to establish a commission on nuclear regulation to resolve cross-cutting issues and reduce duplication.

We will restore proportionality in decision making. Government will convene an independent expert panel to review how the tolerability of risk framework is interpreted, to guide regulators and industry in nuclear. Regulators will revise guidance, so that it supports proportionate, evidence-based decisions. We will clarify how proportionality, in nuclear, should be applied under the Health and Safety at Work etc Act 1974, without reducing protections for workers or the public.

We will strengthen culture, skills and digital capability. We will go further with the nuclear skills plan, and launch a nuclear digital programme to drive the adoption of new tools, such as artificial intelligence and digital twins, across design, regulation, and delivery.

We will speed up the wider planning and environmental system to support nuclear delivery. We will use the nature restoration fund and environmental delivery plans to provide clearer routes for meeting obligations, resulting in better outcomes for nature. For defence nuclear, the Government will bring forward an alternative pathway for compliance with the habitats regulations, where this is necessary in the interests of national security. We will introduce a proportionate biodiversity net gain framework for nationally significant infrastructure, and will legislate to constrain the duty for national parks and national landscapes. We will improve our nuclear siting policy by updating the national policy statement for nuclear, EN-7, to support fleet deployment, and will revise the semi-urban population criterion in a way that maintains public safety while expanding the range of viable sites.

We will make the planning pathway faster and clearer. We will streamline the pre-application phase for development consent orders, and strengthen the initial assessment of principal issues, so that examinations focus on what matters. We will also ensure that the geological disposal facility programme has the powers that it needs, including on land access and bespoke permitted development rights.

International co-operation remains important. The ONR is deepening work with partner regulators, including through recent agreements with the United States and Canada, and we will support a joint international strategy to reduce duplication and share effort. Implementation of these reforms will be overseen by a nuclear regulatory implementation panel, made up of senior figures from Government, regulators and industry, which will report regularly to the Chief Secretary to the Prime Minister and relevant Secretaries of State.

Delay has a cost, so we are already working on some of the reforms, and aim to complete implementation by the end of 2027, subject to legislative timelines. To ensure that live projects like Sizewell C and the small modular reactors programme can benefit, we will begin updating processes, and will issue interim guidance immediately, so that improvements can start now, while we wait to take through legislation.

I want to thank John Fingleton and the taskforce for their work in bringing these issues to the fore, and I make the commitment to all that through this programme, we will cut duplication, strengthen safety by focusing on outcomes, and give investors and developers the confidence to proceed. We are delivering on these recommendations already. Taking these steps is vital for securing our energy future and sustaining the sovereign capabilities that keep our country safe.

[HCWS1398]

Draft Renewables Obligation (Amendment) Order 2026

Michael Shanks Excerpts

Wednesday 11th March 2026 General Committees

[The Minister for Energy (Michael Shanks)]

I beg to move,

That the Committee has considered the draft Renewables Obligation (Amendment) Order 2026.

It is a pleasure to serve under your chairship, Mrs Barker. The draft order was laid before the House on 2 February, under the affirmative procedure.

We are all acutely aware, particularly at this moment in time, that households and businesses across the country are feeling the effects of global energy volatility. That is why the Government remain absolutely focused on finding sensible and targeted efficiencies to reduce the costs of the UK energy system, while ensuring that we maintain the investor confidence that is critical to building the system we need for the future.

The order changes how we uprate the cost of the renewables obligation scheme, switching from the retail price index to the consumer price index from 1 April. CPI offers a more accurate reflection of real-world price changes than RPI, which tends to overstate the rate of inflation. In simple terms, that means that the costs of operating the scheme will grow more slowly in the years ahead, easing pressure on the consumers who pay for it through their energy bills. The change forms part of wider efforts to generate efficiencies across the energy system, reduce costs for businesses and ease the pressure on domestic bills.

This change follows a joint public consultation undertaken by the UK Government with the Scottish Government and the Northern Ireland Executive, who operate their own renewables obligation schemes. The consultation closed in December and a response was published in January. We recognise that the proposed options generated significant concern and much disagreement from renewables obligation stakeholders. We understand the points raised about the need for policy stability and to ensure that we have strong investor confidence in the UK.

But it is precisely because the renewables obligation scheme has been such a success—it now supports over 30% of the UK’s energy generation—that we must ensure its costs remain proportionate and sustainable as it continues to operate. The scheme has been instrumental in building the renewable capacity that we rely on, and we want it to keep doing that, but without placing unnecessary burdens on bill payers.

By implementing the change in time for the new compliance year in April, we can secure estimated savings of £1.9 billion over the remaining lifetime of the scheme, which works out at around £180 million a year for the next 11 years. These are meaningful savings for consumers, delivered through a sensible and reasonable change to the electricity generation scheme.

Our approach is one of balance: it reduces the cost pressures on households and businesses, but continues to provide the stable environment for long-term investment in the renewable sector. As we all know, the world around us is becoming increasingly unstable. The only sustainable way to shield hard-working people around the UK from global energy shocks is to accelerate our transition to clean, home-grown energy. That means not only deploying new renewable capacity, but ensuring that every part of the existing system is as fair, efficient and affordable as possible.

The order before us is a small but extremely important step in that direction. It reflects a pragmatic, consumer-focused approach that underpins our energy strategy: looking for opportunities to make the system better for British people, while maintaining the confidence of the investors who are so important for building the infrastructure of the future. Subject to the will of Parliament, the arrangements will come into force the day after the regulations are made. I commend the draft order to the Committee.

--- Later in debate ---

[Michael Shanks]

I always welcome unanimous support from the House for the Government’s energy policy, and it sounds like we will have that this afternoon, which I appreciate.

I always thank the shadow Secretary of State, the right hon. Member for East Surrey, for her lessons, although they often do not involve her own time in the Government, or the Conservatives’ 14 years in government. If it was so important to reform the renewables obligation, she had a number of years in which she might have done that, but she did not. It is now, after being Government, that this is all suddenly coming forward.

There is an important point about the lessons learned from crisis like this, and this is a moment for us to learn the right lessons. Only four years after the price spikes caused by the Russian invasion of Ukraine, when the fossil fuel market did broadly what it is doing now, the lesson is to move even faster away from gas, but the Conservative party is doubling down and saying that now is the time to invest even more in gas. That is the wrong lesson to learn from this crisis. Hoping that, at some point in the future, the wholesale price will come down to a point that justifies that argument is not what we should be doing with the bills of our constituents and businesses across the country. We should be building a system that protects us from volatility, and that is what we are doing.

The Liberal Democrat spokesperson, the hon. Member for South Cambridgeshire, made the point well that the UK benefits from having a safe and predictable environment for investors. That is really important, because if that changes, we will see the tens of billions that have been invested in this country in the past 18 months go somewhere else, and will also see the cost of capital—of building the infrastructure we need—go up, which goes on consumers’ bills.

A stable regulatory environment in which people can be confident that a contract means what it says is one of the strong fundamentals of this country’s economy, and why people choose to do business here. If we start ripping up contracts, we lose that credibility, so I do not think that plan is serious or credible. If it was, it surely would have been introduced after 2022, when we had the same lessons that we have now. But it was not.

On the point about costs, it is important to reiterate that the renewables obligation scheme will come to an end in 2037. A number of projects will come off the scheme between 2027 and 2037, so the cost will come down. We made a conscious decision in the Budget to increase taxes on the wealthiest in order to pay to bring down the bills of some of most hard-working and less well-off people across the country, and we stand by it. That is why, in April, in the midst of a price crisis, the price of energy in this country will be capped and bills will go down by more than £100, because of the decisions this Government have chosen to take. By the sound of it, the Conservatives would not have taken those decisions, leaving consumers exposed.

This order is an important step. I recognise that it does not do everything that Members want but, as I said in my introductory speech, it is about being pragmatic. It takes a step that is still unwelcome, understandably, for those who have renewables obligations, but it is a pragmatic way to make sure that we get the best deal for consumers without shaking the foundation of the investment we need to build the clean energy system of the future. We think this is the right approach. We stand ready to take further action on the cost of living and energy bills, and we are doing that work, but this is a really important step. I commend the draft order to the Committee.

Question put and agreed to.

Energy Security and Net Zero: Scotland

Michael Shanks Excerpts

Wednesday 4th March 2026 Westminster Hall

[The Minister for Energy (Michael Shanks)]

Thank you, Dr Huq. There is genuinely nothing I would rather do on my birthday than answer an important Westminster Hall debate on this topic. It is a pleasure and a privilege to be here—cake to follow.

I thank the hon. Member for Mid Dunbartonshire (Susan Murray)—that beautiful constituency on the other side of Glasgow from my own—for introducing this important debate, and it is a pleasure to see so many members of the Scottish Affairs Committee to the Chamber. As an alumnus of that Committee in the last Parliament, it is a pleasure to see it continue to go from strength to strength. As a proud Scot, I reflect many of the things the hon. Lady said about the contribution that Scotland has made to Britain’s economic past, and the critical role it plays at the moment and will continue to play in the future. I will return to that theme later.

I also want to reflect on the fact that it is the strength of us working together across the United Kingdom that has driven much of the investment into Scotland to make these projects a reality. I will come back to that point later because I know that the hon. Member for Strangford (Jim Shannon) will appreciate that, if nothing else.

I want to reflect on some general points, and then I will come briefly to each of the points the hon. Member for Mid Dunbartonshire made, because they are all incredibly important and things we are working towards. On the general argument about what the Government are trying to achieve, we are trying to tackle the energy trilemma—the question of security, affordability and sustainability—by driving as quickly as possible towards clean power. Our target—our mission—of achieving clean power by 2030 is partly about how we get off fossil fuels, and the past few days have demonstrated why that is so important in an uncertain world. It is also, as the hon. Lady rightly said, about how we take the industrial opportunity that goes along with that. How do we get the good jobs and industrial opportunity to go with it?

[Harriet Cross]

Of course, we cannot ignore the events of recent days in the middle east and the impact on oil and gas prices and supply. However, those events make it more obvious why we should be preserving and making the most of the supply and production we have in the North sea. The oil goes into the European market—not through the strait of Hormuz—so it stays accessible, and the gas all comes into our networks in the UK. It is vital that we secure our own production, and the Minister surely recognises that the energy profits levy and the ban on new licences put that at risk.

[Michael Shanks]

I was going to come on to the North sea later, but let me do that now, because the hon. Lady raises important points. Yes, our domestic supply is important—particularly the gas that goes straight into the pipes around the country—and it creates jobs for thousands of people in the industry, many of whom I have got to know over the past 18 months. However, it is also important to know that it has been in decline for a long time, with a 75% reduction in production between 1999 and 2024. Although it continues to play an important role, we have been a net importer since 2004, and that will only continue in the years ahead. Yes, we should continue to support domestic production, and it will continue to play a part for years to come, but our long-term energy security does not come from fossil fuels in the North sea.

Returning to the points the hon. Member for Mid Dunbartonshire made about the North sea, she asked whether we could pull together a plan for the North sea transition. We did that and published it at the end of last year. The North sea future plan is a fantastic read, and I encourage everyone to read it. It seeks, for the first time, to bring together projections on the future of the North sea, skills and workforce planning, and the opportunity that comes from renewables.

We need to look at both sides of the North sea. It has been hugely important for 60 years, producing oil and gas, and it will continue to be important for decades to come. Equally, we need to build up industries that have been important in recent years but that have not grown as much as we would like, and where we have not seen as many jobs as we need. So there is a workforce plan. A North sea future board has also been set up; it met for the first time in Aberdeen in January, and it will meet again in the coming weeks. It is about driving forward actions—not talking about the transition, but working through the solid things we now need to do to make it a reality.

I am conscious of time, and I want to pick up on a number of points. On new nuclear, we absolutely see nuclear as a critical component of the clean power plans of the future. It will be the backbone of a clean power system and will deliver energy security in uncertain times. We need to build nuclear faster, which is why we will respond in due course to the Fingleton review on how to improve regulation. As the hon. Member for Mid Dunbartonshire outlined, we have also invested in the first small modular reactors at Wylfa in Wales.

I genuinely hope we will see a change of Government in Scotland in May, to one that will look at the opportunities that come from nuclear. I had the great privilege recently of visiting Torness and meeting workers who have worked there for 20 or 30 years in good, well-paid, highly skilled jobs—jobs that Scotland is currently missing out on because of an ideological block from the SNP, which we have to remove so that we can build the power we need.

[Graham Leadbitter]

I take the point the Minister makes on nuclear, but the Government have not articulated what they plan to do with nuclear waste. The current projected price for a radiological disposal facility is about £60 billion, and it is marked as red—as unachievable —yet the Government say it is critical. It has not been articulated how any of that will be paid for, how much will come off bill payers in Scotland and why Scotland needs that when we produce more energy than we currently use.

[Michael Shanks]

That is a well-trodden argument that, unfortunately, the facts do not bear out. The energy produced in Scotland is more than it uses, but at any given time Scotland often relies on nuclear energy; in fact, it is quite often imported from England when necessary—when the wind is not blowing and the sun is not shining. Nuclear is critical, and Scotland was relying on gas from Peterhead power station recently because Torness was undergoing renovation work. Scotland does in fact rely on nuclear, and it is important. Furthermore, the argument about costs would be well placed in the SNP’s own plan on this issue, which says that there would be a third off energy bills with independence. There are absolutely no figures to back that up.

Let me move on in the time I have left to the key points that have been made. First, it is absolutely right to centre the future of the country’s economy and of the clean power that we need to get to households and businesses on improving the grid. For far too long, we have not invested in what is probably one of the most important pieces of infrastructure that this country has. As a result, it is taking far too long to connect projects. As the hon. Lady for Mid Dunbartonshire rightly outlined, every single minute of the day we are wasting clean power, which could be bringing down bills, because we cannot get it through the necessary constraints. We have to build that grid, and with that will come tens of thousands of jobs across the country, so it is a hugely important economic opportunity.

I was glad my hon. Friend the Member for Glasgow West (Patricia Ferguson) referenced the importance of community energy and of the local power plan, which was published recently—another fantastic read that I encourage all hon. Members to read. This is about the biggest transfer of wealth and power in the energy space in British history, putting communities right at the heart not just of building energy infrastructure, but owning that infrastructure and benefiting from it. Tomorrow I am going to the Western Isles to see a project that has benefited greatly from being able to own that energy and take the profits that come with it.

Community benefits remain important as well. We did consult on making them mandatory, and we will announce the outcomes of that consultation soon. We have announced bill discounts for people in the proximity of transmission infrastructure and community benefits from that. We also want to see much more shared ownership of energy, with communities having the ability to take a stake in much bigger projects and take the profits that come with that to invest in their local areas. That is hugely important.

Consenting decisions on these projects are devolved in Scotland, and I urge the Scottish Government to move as quickly as possible on making those decisions. Every delay to a piece of grid in Scotland means we are not getting cheaper power on to people’s bills, which could make a huge difference now. Those delays are significant, so I urge them to make that happen.

Finally on the grid, the industry is working collectively to make sure that the billions of pounds of investment going into building the grid results in supply chain jobs across the country.

There were many other things that the hon. Member for Mid Dunbartonshire raised that I would love to spend longer talking about. However, at the outset she made absolutely the right point about Scotland’s contribution to the UK’s energy security. It is not a story of the past or a promise of the future, but a reality at the moment. We have to seize the opportunities that come from the energy transition. That means creating the jobs that go along with the infrastructure we are building, so that Scotland benefits and gets that economic potential.

I am glad there is some consensus on many of the actions we have to take in this space, but the question is how we move further and faster to make this happen. Communities cannot wait for those community benefits or for cheaper power, and we should always root this issue in the Government’s No. 1 priority: tackling the affordability crisis facing households across the country. The clean power mission is the way to do that. In an increasingly uncertain world—not least the one we see on our TV screens right now—the answer is to move further and faster away from fossil fuels and to the cheaper, cleaner power that is an economic opportunity for Scotland and the whole country.

Question put and agreed to.

Draft Electricity Supplier Payments (Amendment) Regulations 2026

Michael Shanks Excerpts

Tuesday 3rd March 2026 General Committees

[The Minister for Energy (Michael Shanks)]

I beg to move,

That the Committee has considered the draft Electricity Supplier Payments (Amendment) Regulations 2026.

It is a pleasure to be in this Committee this afternoon, Sir Alec. The statutory instrument, which was laid before the House on 2 February 2026, amends regulations concerning the levies used to fund the operational costs of the Low Carbon Contracts Company and the Electricity Settlements Company. The LCCC administers the contracts for difference scheme on behalf of the Government under the Energy Act 2013. Under the same Act, the LCCC also administers schemes modelled on the CfD scheme, including the dispatchable power agreement and the low-carbon dispatchable contracts for difference.

The LCCC acts as the revenue collection counterparty for the regulated asset base for new nuclear under the Nuclear Energy (Financing) Act 2022. It is anticipated that, subject to future policy decisions and the will of Parliament, the LCCC will conduct additional work to support Government under the Energy Act 2013. That includes work on a new scheme supporting the deployment of large-scale bioenergy with carbon capture and storage, as well as work related to proposals by the Department for Energy Security and Net Zero to support nuclear generation and around potentially supporting landfill gas generation. The ESC administers the capacity market scheme. Those schemes will incentivise the significant investment that is required in our electricity infrastructure, keep costs affordable for consumers and help to deliver our clean power mission while delivering on energy security.

In terms of the existing schemes, CfDs provide long-term price stabilisation to low-carbon generators, allowing investment to come forward at a lower cost of capital and therefore at a lower cost to consumers. The most recent CfD auction—the seventh that we have had—secured a record 14.7 GW of new clean energy capacity across Great Britain, making it the most successful renewables auction in the country’s history. It brought forward a diverse range of renewable technologies while delivering a good deal for bill payers. The LCCC is currently signing the 197 CfDs with projects that were successful in that auction.

Under the Energy Act, DPAs are agreements modelled on CfDs. They have been designed to instil confidence among investors for power carbon capture and storage projects and to incentivise the availability of low-carbon, non-weather-dependent dispatchable generation capacity. The LCCC signed its first DPA on 19 November 2024, which related to the Net Zero Teesside power project. That pioneering project in the north-east aims to build the world’s first commercial-scale gas-fired power station with carbon capture and storage. Over the next three years, the LCCC is expected to sign additional DPAs, which will drive the private sector investment required to bring forward further power carbon capture and storage projects by the mid-2030s. The LCCC will be the counterparty for those, and funds have been included within the budgets before us to support that role.

The LCCC signed its first low-carbon dispatchable CfD with Drax on 4 November 2025. That agreement, which came before this House, will ensure that Drax generates electricity when needed between 2027 and 2031, thus bolstering our energy security. That was a good agreement for consumers, saving £6 a year on household bills compared with the arrangements in place under the previous Government.

The Government subsequently agreed heads of terms for an additional LCD CfD with EP Lynemouth Power Ltd on 6 February 2026. If a full contract is concluded in the coming months, it will further bolster our energy security by ensuring that Lynemouth can continue to generate between 2027 and 2031. The revenue collection contract with Sizewell C Ltd, the first project to use the regulated asset base model for new nuclear, became effective on 4 November 2025. Funds have been included in this budget to cover the LCCC’s operational costs for that RAB.

Turning to the ESC, the capacity market is the tried, tested and most cost-effective way of ensuring that we have electricity capacity when we need it. It provides all forms of capacity with the right incentives to be on the system and generate electricity when we need it by increasing generation or turning down electricity demand in return for guaranteed payments. The capacity auctions to date have secured the capacity that we need to meet the peak demand out to 2028-29. A T-1 auction is ongoing, and a T-4 auction will take place next week, securing most of the capacity that we need toward 2029-30.

In both the CfD and capacity market schemes, participants bid for support via a competitive auction, which ensures that costs for consumers are kept as low as possible. DPAs are allocated through a process involving competitive assessment, followed by shortlisting, then a final stage of bilateral negotiations between the developers and DESNZ. LCD CfD contracts are agreed following a structured negotiation process between DESNZ and the generator.

Revenue collection contracts under the RAB are agreed through a structured process involving Ofgem, the LCCC and DESNZ, which provides a stable, regulated revenue stream to projects during construction and operation. In turn, we expect the RAB to lower the cost of financing for nuclear—one of the biggest drivers of new project costs—resulting in better value for money for consumers.

The LCCC and the ESC’s effective administration of all those schemes has demonstrated their ability to deliver the schemes at a low cost to consumers. That is part of the reason why the LCCC has been working with DESNZ and other parts of Government to develop new schemes for incentivising the deployment of even more low-carbon technologies. For example, the LCCC is working with my Department to develop incentives that will be useful in bioenergy with carbon capture and storage. Although they have not been confirmed yet, contracts for such projects could potentially be entered into, following the process outlined in the 2013 Act.

It is important that the LCCC and the ESC are sufficiently funded to perform their roles effectively, given their critical role in administering those schemes, which I have just outlined. However, the Government are clear that both companies must deliver value for money. With that in mind, we have closely scrutinised their operational cost budgets to ensure that they reflect operational requirements and objectives for the companies. The LCCC and the ESC are very mindful of the need to deliver value for money as one of their guiding principles.

Operational costs per contract are expected to fall by 27% per CfD across the budget period, despite the growing CfD portfolio, because of a number of actions to bring down costs. The narrative is similar for the ESC, which expects the number of capacity market electricity meters to exceed 1.2 million over the budget period—a 450% increase on current meter numbers. The ESC intends to invest in a system architecture redesign to manage the growth and minimise costs, and it estimates that costs per meter will fall by 23%. The operational cost budgets for both companies were subject to consultation, which gave stakeholders and others the opportunity to scrutinise and test the key assumptions in the budgets and, importantly, ensure that they represent value for money.

These regulations revise the levies currently in place to enable the companies to collect enough revenue to fund their budgets. Any levy collected that is not spent will be returned to suppliers at the end of the relevant financial year, in accordance with the regulations. Subject to the will of Parliament, the settlement cost levy for the ESC is due to come into force on the day after these regulations are made. The operational cost levies for the LCCC will come into force by 1 April in each of the relevant financial years.

I assure Members that the Government are mindful of uncertainties in setting a budget for the next three years, such as world events impacting on energy demand and policy decisions on new schemes that have not yet been taken. Consequently, we will keep the companies’ budgets under careful review throughout the budget period to ensure that the cost to consumers is minimised. I commend the draft regulations to the House.

--- Later in debate ---

[Michael Shanks]

I am grateful for all those technical questions on the statutory instrument before us. Let me turn to the more general questions that were asked. I welcome the support from the shadow Minister, the hon. Member for West Aberdeenshire and Kincardine; it is always a great pleasure when he supports things that this Government are doing. Unfortunately, he does not do it often enough.

On costs, the Chancellor made a decision in the Budget to take £150 off bills. That has come through in the price cap period, taking into account the need for investment in the network in order to pick up the slack from the time that the shadow Minister was in government—I think he was the Minister for networks for a period. The work to build the grid that the country needs was not done then, so we need to invest in the grid now, but that is a significant investment in bringing down bills, and we stand by the promise to take £300 off bills by the next election.

There are two fronts here. The cost of living is the most important thing facing people across the country, and it is the thing that every bit of Government is seized of taking action on. That is why the £150 was important. Equally, there is no shortcut to bring down bills in the long run, so it is important to say that this work is over the lifetime of the Parliament, to ensure that we put in place the measures that get us off more expensive gas.

The shadow Minister referenced AR7. The outcome from that in terms of cost was that the prices came in at 40% cheaper than the cost of building and running new gas power stations. That is fundamentally the difference here. His party has taken the decision to reference the wholesale cost of gas—given the events of recent days, I wonder whether it might revisit that—while completely ignoring the cost of building and operating the new gas power stations that would be necessary. That power does not just come out of nowhere.

On refusing to publish the analysis, I have the benefit of taking my written questions incredibly seriously, so I signed off the answer to that written question myself, and that was not in fact the answer. I do not know whether it was the shadow Minister who asked the question, but the answer that was sought was in the footnote to the AR7 publication, so we did not have to publish more. It was there in the footnote, if his colleagues had bothered to read it.

We have made it very clear that we will publish a response to the Fingleton review very soon. We had hoped to do that in the past few days, but, given all the things that are going on, we will publish it as soon as we possibly can. We are determined to move forward on the recommendations, because the shadow Minister is absolutely right; we need to build more nuclear much faster in this country.

Let me turn to the hon. Member for South Cambridgeshire. I am delighted that the Lib Dems still take credit for some things that they did in government—although not so much austerity and tuition fees. We will move past that, because I know she does not like to talk about those days.

The hon. Lady is right to raise the uncertainty in the middle east. That underscores how important it is that we focus on our energy sovereignty here in the UK. This is clearly a turbulent time, but, in truth, we have been living through an uncertain world for a very long time. The only way we can get off the volatile series of ups and downs that we have seen in fossil fuels over decades is to build clean power here in the UK and control the nuclear, the renewables and the storage that goes along with it, which is absolutely critical.

These schemes are really important, and we have seen CfDs and other things being exported to other countries, because they are seen as the way to reduce the cost of capital. That feeds through into all consumer bills, which we are determined to reduce. I welcome the cross-party consensus on the Government’s energy policy—it is a delight to see.

Question put and agreed to.

Energy Developers Levy

Michael Shanks Excerpts

Wednesday 25th February 2026 Westminster Hall

[The Minister for Energy (Michael Shanks)]

It is a pleasure to join this debate under your chairship, Mr Twigg; I know that you take a great interest in these issues. I thank my hon. Friend the Member for Suffolk Coastal (Jenny Riddell-Carpenter) for securing the debate. The hon. Member for Strangford (Jim Shannon) was right: my hon. Friend is making a name for herself as a hard worker in this space. Our meetings about this issue have been genuinely really helpful and insightful for me—and her as well, I hope. She is right to flag these issues.

I should also say at the outset that I genuinely welcome the tone that my hon. Friend has taken since she has become MP for Suffolk Coastal. In this place at this time, it is very easy to take the view that the easy answer is simply to say that we should not build anything anywhere ever again and let the country continue to slide further and further backwards; many on the Opposition Benches, who of course are not here at all, would say that.

My hon. Friend concluded her speech by saying something worth repeating: many in her community and across the country are pro the energy transition—they are pro-investment, pro-growth and pro-building the infrastructure—but they rightly want to know that that will be well planned and benefit their community. It is entirely legitimate for communities to ask for that and to be concerned when it does not happen. Given that spirit, she has raised this debate in the right way.

I want to pick up on a couple of things and also go back to why the infrastructure is so important in the first place. We sometimes lose sight of why it is so important for us to build energy infrastructure—in particular, much of the transmission infrastructure that is in my hon. Friend’s constituency. She said that the previous Government had not done that work, and I will come back to that.

It is worth remembering that since this Government came to power we have sought to tackle the energy trilemma: how we bring down bills and make the cost of living more affordable—today’s decision on the price cap is an important statement of how seriously we take that mission; how we deliver our long-term energy security in an uncertain world and how we move away from the volatility of fossil fuels, which have cost us so dearly in recent years; and how we build infrastructure that sets the country up for the future. This is about connecting not just renewable energy but the demand projects that will stimulate economic growth across the country. If we do not do these things, all we will do is harm that economic growth. Those decisions are incredibly important.

[Mr Carmichael]

I urge the Minister to learn from the experience of Shetland and Sullom Voe, 50 years ago. We took the most important step on North sea oil and gas coming ashore in Shetland, but on our terms: there was a genuine funding stream coming to the community. If we give the whip hand to the corporates, they will always use it to their benefit.

[Michael Shanks]

The right hon. Gentleman makes a good point; a generation of lobbyists should look back at the history books of Shetland Islands council at the time, because it is an extraordinary story of how it seized the opportunity of what it knew then would be decades North sea oil and gas and has still benefited from it.

I was also going to come to the right hon. Gentleman’s other point, around the Viking wind farm, which I have seen in the Shetlands myself. The scale of it is extraordinary, but the community benefits are not where they should be and the community is not feeling enough of the benefit of it. It is important that we do everything we can to reduce the constraints on wind, so that local communities benefit directly from it and the country as a whole benefits from cheaper power on the grid, bringing down bills.

Let me turn to some of the actions that we have taken since we came into government. We have set up Great British Energy—a really important moment for us to say, for the first time in 70 years, that we want the public to have some ownership stake in our energy future. We have delivered the most significant programme of investment in home-grown clean energy in our history. Just a few weeks ago, we published the local power plan, the biggest shift of wealth and power in the energy space in British history, to make sure that energy projects are not just built by developers, but owned by local communities that have a real stake in their energy future. We also published the warm homes plan, so that we can have the biggest upgrade to homes in British history.

Any infrastructure, in the energy space or elsewhere, brings local impacts, and there is no point in anyone pretending that those impacts do not upset local people. That is why we have an extremely rigorous planning system, why we take great care over decisions that are made and why, at times, there is great frustration about the length of time it takes for planning decisions. However, that is because the public rightly have a voice in that process, and important determinations should take time. We should always remember the fundamental outcome: since the poorest in our society have paid the price from our exposure to fossil fuels, the infrastructure we are building today is imperative, and it is important that we move faster than ever before.

My hon. Friend the Member for Suffolk Coastal and I have talked about cumulative impact before, and I have said repeatedly in the House that it is a serious issue. All nationally significant infrastructure projects must take account of cumulative impact, including the range of those cumulative impacts—not just the number of projects in a particular place, but the impact on other local services and other bits of infrastructure. They must submit a local impact report, which makes the examining authority aware of what those potential impacts are. That process must demonstrate that the applicant has taken seriously the concerns of local communities. If they have not, that will count against them. Consultation cannot be an exercise to tick a box; there must be some demonstrable engagement with that process. Local communities have a voice in that process through early consultations, but they can also register through the Planning Inspectorate in the pre-examination stage. All those various issues are taken into consideration.

Let me also speak to the broader point about how we plan the future energy system. My hon. Friend made a correct observation: while the previous Government now want to run a mile from all the renewable energy projects that they developed, which we would support— I think I am the only person still cheerleading the previous Government’s drive for renewable energy, because they certainly are not—they did not design and co-ordinate the system such that we were not building unnecessary grid to connect all those projects. My hon. Friend’s constituency is a good example of where better co-ordination at a strategic level would have got the same outputs from the system, but with much less local impact.

We are taking forward a number of things—this is where we get into the acronym soup that is the energy world. First, and most importantly, the National Energy System Operator will design the first ever strategic spatial energy plan, or SSEP, which will be published by the end of next year. This is an important opportunity for us to design the future of our energy system holistically: to take into account what can be built where and what the future energy system looks like for our needs, not now, but in the future. As a result of that planning, we can design the most efficient network and transmission system that goes with it. The centralised strategic network plan, which will be the holistic design of the network, will follow that. This is something that we should have done 15 or 20 years ago, but we start from where we are now, and we are determined that the future of our energy system will be much more strategically planned and aligned.

That plan will take into account local impacts and views, and the regional energy plans in particular will take a much more granular and local look, engaging with local authorities and others to make sure that those plans really take into account both local needs and local opportunities. Those will be designed for Scotland, Wales and nine English regions, and we will bring together various people to share their views on how the plans should meet local priorities. I want to be really clear about the scale of that work. The reason why the Government are taking longer than perhaps we would like is that that is the best way to plan long into the future what the system will look like, and to give communities a real opportunity to shape it at an early stage. That is important for the planning of the system and for community benefits, which other Members have raised.

It is really important that we fundamentally recognise that communities who host energy infrastructure are doing a service for the country. Infrastructure has to be built somewhere. There is not some third place that would let us say, “Well, we are in favour of this, but please don’t build it in my area.” At some point, it has to go somewhere; as a Government, we are done with dither and delay and we are going to build things again, but communities should get a benefit from that infrastructure being built. We are committed to making sure that communities who host infrastructure will benefit. As my hon. Friend said, we have consulted on whether community benefits should be made mandatory—at the moment, they are voluntary and a patchwork across the country, and they have different degrees of impact on communities, even where the funding is being delivered—and we will respond to that consultation soon.

In the Planning and Infrastructure Bill, we have also outlined the very first community benefits and bill discounts for people close to transmission infrastructure, recognising that often they have been left behind in terms of community benefits, as pylons and transmission wires flow through communities. That scheme will be up and running soon. It will directly deliver money off bills for those people living within 500 metres of new transmission infrastructure, but also millions of pounds of investment in communities next to significant pieces of transmission infrastructure such as substations. The grid is critical for the future of the country, and those who host grid infrastructure should get some benefit from that. In July last year, we also published guidance on voluntary community benefits to make sure that they are as robust as they can be.

My hon. Friend mentioned a levy, and I am happy to meet her to discuss that further. I pay tribute to the fact that, having identified a problem, instead of just bringing that problem to the House—I do not want to criticise other hon. Members here—she has worked on a solution. I am happy to engage with it and to look at it further.

There are two things that I want to say clearly. First, the affordability crisis is this Government’s No. 1 objective. It is driving decisions right across Government. It is what has led to a 7% reduction in bills from the next price cap period, which was announced today. Every single penny that might find its way on to bills has to be scrutinised very carefully. I am initially hesitant at the idea of an additional levy. Although my hon. Friend made the point that these energy companies are making significant profits, and I would not disagree with her on the scale of some of those profits, we should also be aware that, unless the Government are going to take a power to cap those profits, it is likely that the cost of a levy and the costs of the projects themselves would simply be passed on. Consumers, at the end of the day, would pay for it. I will look into her suggestion further, because every penny on bills makes a difference.

Finally, on section 106 agreements, in addition to community benefits arrangements locally, developers are already required to mitigate specific local impacts through 106 agreements. They are legally binding agreements that are paid to local authorities. With section 106 agreements and community benefits together, we think work is being done to invest in and enhance communities, but I am happy to look at what my hon. Friend has proposed in more detail.

To conclude, I reiterate two things. First, my thanks not only to my hon. Friend the Member for Suffolk Coastal, but to right hon. and hon. Members across the House who made serious points and suggestions on how not to turn away from necessary investment, but to ensure that communities genuinely benefit from it. They are absolutely right to champion their local community and to ensure that everyone benefits from the energy transition. Secondly, we should not for a moment think that building that infrastructure is optional, or that it can all be done somewhere else. There are those in this House who believe that we can simply go backwards to deliver energy security and affordability without a serious and credible plan to do so, but simply tying communities to fossil fuels for longer is not a serious proposition.

I reiterate what I said at the beginning. My hon. Friend rightly made the case that all the polling that we have seen points to the country being in favour of the energy transition. Every piece of research points to the importance of tackling the climate crisis, which is not a future threat, but a very present reality. Infrastructure, which for too long has been held up in this country, is necessary to do that. It is necessary to get clean power, cheaper power, to people’s homes and businesses, and to bring down bills, but it is also absolutely necessary to unlock the economic growth that this country needs. There is no shortcut to doing that. We have to build the infrastructure that the country has been crying out for, for many years.

I thank hon. Members for their participation in the debate, including my hon. Friend the Member for Suffolk Coastal. I am happy to meet her to discuss the issues further. As I said at the beginning, we take seriously the role that communities play. We thank them for putting up with disruption when infrastructure is built, and for hosting that infrastructure on behalf of the country. We want to ensure that they benefit from it.

Question put and agreed to.

Contracts for Difference: AR7 Solar and Onshore Wind Results

Michael Shanks Excerpts

Tuesday 10th February 2026 Written Statements

[The Minister for Energy (Michael Shanks)]

The seventh contracts for difference auction results for onshore wind, solar and tidal stream have been published today—with a record number of projects, 189, totalling 6.2 GW.



Along with offshore wind results published in January, this makes allocation round 7 the largest round ever delivered, securing an unprecedented 14.7 GW of new clean energy capacity across Great Britain. This marks a major step forward in accelerating our clean power mission with successful onshore wind and solar AR7 capacity estimated to support up to 10,000 direct and indirect jobs at its peak.

Today’s announcement will support enough clean electricity to power the equivalent of over 3 million homes, helping to shield the UK from volatile global fossil fuel markets and deliver long-term affordability for consumers.

We have secured a record number of projects across the lowest cost energy sources to build and operate. Once built and generating, the new clean, home-grown power secured today will reduce household bills. New onshore wind cleared at £72.24 per MWh, and new solar at £65.23 per MWh, both under half the £147 per MWh cost of building and operating new gas power stations.

Today 4.9 GW of solar has been procured, which is the largest ever procurement of solar projects in the UK, at a clearing price that is lower than the previous round and a 13% discount to the auction ceiling price.

Some 1.3 GW of onshore wind contracts have been awarded, including the largest onshore project to be successful in England in over a decade and over 1 GW in Scotland. Through Government action to provide dedicated budget for onshore wind for the first time, we have achieved significant new capacity at a competitive price, with a discount of over 20% against the auction ceiling price.

The CfD scheme continues to support innovation in marine energy with four new tidal stream projects totalling 20.9 MW. This brings total CfD backed tidal stream capacity to 140 MW, maintaining the UK’s world leading position in this emerging technology. Tidal stream provides predictable, reliable power that complements intermittent generation from wind and solar. Around half of the world’s operational deployment of this cutting-edge innovation is situated in UK waters.

By supporting a diverse mix of offshore wind, onshore wind, solar and tidal stream projects, the AR7 package strengthens the UK’s ability to keep energy secure, affordable and resilient year-round—while delivering on clean power ambitions. This protects households from global energy price shocks, which have contributed to half of all recessions since the 1970s. In 2025 alone, global gas prices spiked more than 15% in a single week due to instability in the middle east, demonstrating the need to build a more secure and sovereign energy system.

The results of the solar and onshore wind auction announced today, along with the offshore wind result last month, are together a significant step forward for the clean power mission. Securing record capacity across Britain of the cheapest power sources and supporting thousands of new jobs—this Government are taking back control of our energy system and helping bring down bills for good.

[HCWS1318]

Local Power Plan

Michael Shanks Excerpts

Tuesday 10th February 2026 Written Statements

[The Minister for Energy (Michael Shanks)]

Britain’s drive for clean, home-grown energy is central to our mission to build an economy that works for the many. Today, jointly with Great British Energy, the Department for Energy Security and Net Zero has published the local power plan, which presents a new vision for community and local power.

We are sending the clearest signal yet that local and community energy is a priority and that it is central to the clean energy transition we must deliver. The local power plan is the most significant expansion of support for community energy in our country’s history. Backed by up to £1 billion from Great British Energy, it will support at least 1,000 community and local energy projects by 2030, helping communities generate clean power and keep more of the value locally.

Community ownership is a proven tool for building local wealth, pride and participation, from community-owned pubs and leisure centres to pioneering energy schemes across the highlands, Wales and Bristol. This plan is about putting communities in the driving seat of the energy transition, ensuring clean energy is done with communities, not to them, and enabling them to share directly in the rewards. It represents a historic shift in how Government thinks about ownership in our energy system.

The plan brings together four strands of support delivered jointly by Great British Energy and Government:

Direct funding and finance: For too long, community groups with ambitious ideas have relied on small, short-term grants and have struggled to access finance. Great British Energy will provide targeted grants and loans from feasibility to construction. A blended local investment fund will help crowd in private capital and ensure viable projects can scale.

Capacity and capability: Many communities have the ambition but lack the technical or commercial support required. We are therefore creating a new advisory service and a “Community Energy in a Box’’ toolkit—offering templates, guidance and expert help for groups and local authorities to turn ideas into investable schemes.

Business model development: We will work with industry to establish repeatable, bankable models—shared ownership, joint ventures and smart local energy systems—so that projects can grow without long-term dependence on grants. These models will work in rural villages, coastal towns, city neighbourhoods and island communities.

Policy and regulatory reform: We will work with Ofgem, the National Energy System Operator and network operators to look to improve grid access, simplify routes to market and support shared ownership. Community schemes have faced barriers too high for volunteers but trivial for developers. We are working to remove those barriers in all four nations of the UK.

Since coming into power, we have already kicked off £280 million of funding, backing projects across all four nations—from schools in Oldham to community facilities in Blaenavon and Glasgow.

This additional £1 billion of funding from Great British Energy over the spending review period will help communities develop new projects, access early-stage grants and secure loans or project finance. This includes support for shared ownership so local people can buy a meaningful stake in renewable developments in their area. This funding will help power community pubs, sports clubs, miners’ welfare organisations and village halls across the country. This marks the beginning of a long-term effort to remove obstacles to growing community and local power.

The local power plan is the most comprehensive package to grow community energy our country has ever seen—building on our Pride in Place programme, the community right to buy, and our commitment to double the size of the co-operative sector. It follows the ambitious steps Great British Energy is already taking: cutting bills for schools and hospitals through new solar installations, building Britain’s clean-energy supply chains through the £1 billion “Energy, Engineered in the UK” programme, and investing in its first commercial project to put the UK at the cutting edge of floating offshore wind.

But this future will not be delivered from Whitehall alone. It will be built place by place, community by community. So today we are issuing an invitation to communities across the country: come forward with proposals for your area, and we will support you to help make them happen.

[HCWS1321]

Advanced Nuclear Framework

Michael Shanks Excerpts

Wednesday 4th February 2026 Written Statements

[The Minister for Energy (Michael Shanks)]

Today we are publishing the “Advanced Nuclear Framework” for private projects, which reinforces the golden age of nuclear. The framework sets out our approach to enabling privately led advanced nuclear projects, including small modular reactors and advanced modular reactors.

Recent global events have highlighted the importance of energy security and the need for a resilient, clean energy system. Nuclear energy has a vital role in delivering stable, affordable, and clean baseload power. The UK is already progressing major projects such as Hinkley Point C and Sizewell C, alongside Rolls Royce being confirmed as the preferred bidder following the Great British Nuclear small modular reactor technology selection process. We are now entering a new phase in the golden age of nuclear, one that harnesses private sector innovation to deliver advanced nuclear projects.

The framework explains how Government will create the enabling policy landscape for the private sector to initiate and deliver advanced nuclear projects. It is focused on supporting the development, commercialisation, and deployment of advanced civil nuclear private projects within the UK’s energy sector.

This policy direction is reinforced by the Government’s response to the nuclear regulatory taskforce, ensuring that regulatory reform keeps pace with the ambition of the framework. The Government accept the principle of all 47 of the taskforce’s recommendations. A full implementation plan will be published within three months, with reforms completed within two years, subject to legislation. Departments, regulators and industry should act now to support faster, lower-cost delivery of new nuclear and strengthen energy security.

The taskforce set out that these reforms could have a fundamental impact on the sector. They are intended to drive forward new nuclear in a safe, affordable way, save tens of billions from the cost of decommissioning legacy nuclear activities, and lower energy costs for consumers, industry, and public services.

This bold action will make nuclear energy more affordable, quicker to deploy, and will uphold high safety standards while boosting sector growth and investment. The strengthened regulatory framework will build a more agile, innovative, and collaborative environment, positioning the UK as a global leader.

The framework sets out a pathway for private sector participation in the delivery of advanced nuclear projects, specifically small modular reactors, advanced modular reactors and micro-reactors. It defines the principles, processes, and support mechanisms.

Key elements of the framework include:

The UK advanced nuclear pipeline and a project readiness assessment process to endorse viable projects and unlock private investment.



A suite of enabling measures across finance, planning, regulation, fuel supply, and skills including potential support through the National Wealth Fund, planning reforms, and targeted protections for high-impact, low-probability risks.

Projects that meet the relevant criteria will progress through the assessment process and join the pipeline, receiving early Government endorsement to boost investor confidence and helping developers unlock private capital.

The publication of this framework marks a significant step in delivering a secure, low-carbon energy future and supporting innovation and investment in this critical sector.

Alongside the “Advanced Nuclear Framework”, this Government have also published the “Statement on civil nuclear fuel use”. This statement outlines the Government’s expectation around fuel use in the UK, making sure we enable the highest standards of nuclear security, support industry planning, prevent delays, and foster a secure, sustainable nuclear sector that helps operators align with a consistent nuclear fuel policy environment.

[HCWS1302]