UK's Net Zero Industrial Clusters Funding and Ofgem's TNUoS Charges Proposal
Key Ideas
  • The UK government is allocating up to £21.7 billion over 25 years to establish the first net zero industrial clusters in Teesside and Merseyside, with a focus on carbon capture and blue hydrogen production.
  • DESNZ anticipates the projects will create 4000 new jobs and remove over 8.5 million tonnes of carbon emissions annually once operational, potentially starting from 2028.
  • Ofgem has proposed a cap and floor on generators' transmission charges to address rising costs and volatility, aiming to reduce investment uncertainty and protect consumers in the transition to clean power by 2030.
  • The proposed cap and floor intervention on TNUoS charges is set to be implemented by April 2026, pending code modifications and industry feedback to ensure compliance with EU regulations.
The UK government has committed to providing £21.7 billion in funding over 25 years to support the country's first two net zero industrial clusters. These clusters in Teesside and Merseyside aim to capture and store 20-30 million tonnes of carbon dioxide annually by 2030. The funding will primarily be used to develop carbon capture, usage, and storage (CCUS) infrastructure and connect the projects to blue hydrogen production facilities. Blue hydrogen production involves capturing and storing CO2 emitted during the hydrogen production process. The projects are expected to create thousands of new jobs and significantly reduce carbon emissions once operational, with an initial operational timeline now set for 2028. Energy Secretary Ed Miliband highlighted the importance of this funding in paving the way for clean energy solutions and revitalizing industrial regions. On another front, Ofgem has addressed the growing uncertainty surrounding Transmission Network Use of System (TNUoS) charges, proposing a cap and floor system to mitigate the volatility of these charges. Concerns have been raised about the impact of unstable charges on investment decisions and consumer costs in the context of the UK's clean power commitments for 2030. Ofgem's proposal aims to establish upper and lower limits on charges paid by generators, offering more predictability and protecting consumer interests. The regulator has called for modifications to the current charging methodology to ensure compliance with EU regulations and a smooth implementation process by April 2026.
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