Focus on the UK |
A prudent strategy for uncertain times?
Doubling down on the need for home grown low carbon power
It has been a busy few weeks in the energy space for the UK government, with, among other initiatives, the signing of contracts for the country’s first fleet of small modular reactors (to be located at the Wylfa site), publication of its plan for acting on the Fingleton Review recommendations for more effective nuclear power safety regulation, and consenting of the UK’s largest solar project to date, Springwell, 800 MW (nearly 400 MW bigger than the UK’s largest operating PV facility, Cleve Hill (373 MW)). Steps have also been taken aimed at massively expanding renewable developments sited on government/public land, eg using brownfield, industrial and railway sites to host solar panels and wind turbines. In addition, a major overhaul of planning, land access and grid connection processes is underway, with the aim of “cutting delays for essential grid upgrades and renewables, and exploring new routes for developers to build and connect their projects faster.”
The delinking of gas and electricity prices – “ending the unfair way international gas prices push up electricity prices across Great Britain” – is another issue that has been receiving attention. Instability in the Middle East has shown that Britain’s reliance on international fossil fuel markets leaves the country exposed to volatile gas prices, even though much of the country’s electricity comes from cheaper renewables and nuclear, the government notes.
Over time, the problem is said to be easing as new clean energy projects are built on fixed price contracts that protect consumers from gas price volatility. But a significant share of renewable generation – about 30% of Britain’s power supply – is still exposed to wholesale prices set by gas, and is thus vulnerable when international prices rise.
The government has set out new measures to ‘break the link’, reducing the impact of volatile gas prices on the price of electricity. These will include the offering of voluntary long term fixed contracts to existing low-carbon generators not on fixed price contracts – covering around a third of Britain’s power supply. These Wholesale Contracts for Difference (WCfD) will give existing eligible generators not already contracted under a CfD the option of accepting a fixed price for the electricity they generate, reducing exposure to volatile gas-linked electricity prices. The WCfD regime would see eligible generators give up their current forward wholesale revenues in exchange for a fixed power price achieved via a CfD. Under this scheme it is envisaged that generators accredited under the Renewables Obligation
(RO) would continue to receive support via the RO in the way they do currently – with only their wholesale revenues being exchanged for a fixed price CfD.
Cleve Hill, at 373 MW, the UK’s largest operating PV park. Photo: Cleve Hill Solar Park Ltd SMR contract
Immediate action has also been taken to tax excess profits through the Electricity Generator Levy by raising the rate of this temporary tax from 45% to 55%, ensuring an increased proportion of the extraordinary revenues generated when the gas price spikes, eg, due to conflict in the Middle East, is available to government.
The new measures will further reduce the share of British electricity exposed to gas price shocks and provide generators the economic incentive to move on to fixed contracts not linked to volatile gas.
Britain has already moved from gas setting the price of electricity around 90% of the time in the early 2020s, to around 60% today. Thanks to the expected expansion of clean energy, it is estimated that gas will set the wholesale price around half of the time by 2030. “As we face the second fossil fuel shock in less than five years, the lesson for our country is clear: the era of fossil fuel security is over, and the era of clean energy security must come of age,” said Energy Secretary Ed Miliband. “That’s why we’re doubling down on clean power, to give our country energy security and bring down bills for good.”
16 | May/June 2026 |
www.modernpowersystems.com
Small modular reactors are seen by the British government as a key part of its clean power agenda and 13 April saw the signing by Great British Energy – Nuclear (GBE-N) of a contract with Rolls Royce SMR, formally starting technology design activities “that will enable the delivery of the UK’s first small modular reactors as part of the government’s clean energy mission.” Rolls-Royce SMR was selected as the preferred technology partner in June 2025, and £2.6 billion was allocated in the 2025 Spending Review to enable this contract and wider programme delivery.
The contract will require Rolls-Royce SMR to work with GBE-N to deliver against key milestones as it commences site-specific design, regulatory engagement, and planning processes, ahead of a future final investment decision. GBE-N is an arm’s-length body of the UK Department for Energy Security and Net Zero (DESNZ), tasked with supporting the development and deployment of new nuclear technologies in the UK.
“The current conflict in the Middle East is yet another reminder that the only route to energy security and sovereignty for the UK is to end dependence on fossil fuel markets, and accelerate the transition to clean, homegrown power,” GBE-N said, noting that it had already
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