Tom Glover, RWE UK Country Chair, responds to Chancellor John Healey’s Budget:
“RWE supports the measures in the Budget that will help make energy more affordable for consumers and encourage greater electrification.
“Immediate and targeted support for the energy bills of eligible households from January 2027 is an important step. Extending the VAT exemption for electricity beyond April 2027 will also help improve the relative cost of electricity compared with gas and encourage the transition towards electrification.
“Moving fixed gas costs from the standing charge into the unit rate for domestic consumers can benefit lower-consuming households, while strengthening the incentive to reduce gas consumption and switch to more efficient electric technologies. It is important that the detailed design protects households with higher essential heating needs and forms part of a wider approach to affordability, including targeted support for vulnerable consumers and reducing the relative cost of electricity.
“It is also right that low-carbon hydrogen projects are funded through general taxation rather than by gas consumers. Pricing an unpredictable, unhedgeable levy into wholesale electricity prices would likely increase consumer costs overall.
“We note the Government’s priority is ‘cheap power’ and agree that clean power, in particular continued investment in renewables, will be key to achieving this. Analysis by Aurora Energy Research shows that investment in offshore wind up to a strike price of around £94/MWh is beneficial for households.
“We also share the Government’s ambition to reduce consumers’ exposure to international gas prices. The good news is that the UK already has a proven mechanism for doing this: by continuing to invest in renewables through two-way CfDs, we can progressively insulate electricity bills from movements in the gas price. The faster we build out renewable generation, the less influence international gas prices will have on the cost of electricity for British consumers.
“Giving existing renewable generators the opportunity to move onto two-way CfDs is another positive step. It is a practical way of extending the benefits of the CfD model to more of the UK’s existing renewable fleet, providing generators with greater long-term revenue certainty while protecting consumers from periods of high and volatile wholesale prices. Importantly, the consultation published today confirms that the scheme will be voluntary rather than compulsory, helping to preserve investor confidence.
“The Government is right to focus on accelerating grid delivery, although it is not yet clear that Great British Grid (GBG) will address the practical barriers currently holding back investment and connections. An initiative like GBG is not, in itself, a solution to supply-chain constraints or delays in building infrastructure. The priority should be measures that demonstrably speed up delivery, including greater competition and expanded opportunities for self-build. The focus should be on removing barriers and strengthening accountability across the existing system. The commitment to review accountability across the energy system is therefore an important one, with clearer expectations needed for the roles, responsibilities, priorities and outcomes of NESO, Ofgem and DESNZ.
“We recognise the difficult choices the Government has had to make, but material reductions or changes to funding for carbon capture and hydrogen risk slowing investment in technologies that will be important to the UK’s future energy system and industrial competitiveness. The UK has a real opportunity to lead in both CCS and hydrogen, building on its natural assets and industrial expertise. Continued support for projects is important, and we would encourage the Government to provide clarity on how it intends to maintain momentum for the next wave of projects and ensure there remains a stable, investable framework for the sector.”