Today (4 March), Chancellor of the Exchequer, Jeremy Hunt, has unveiled £120 million in funding for the Green Industries Growth Accelerator (GIGA) ahead of the Spring Budget.
Revealed as part of a broader £360 million investment by the Treasury to bolster domestic research and development (R&D), £120 million of the funding will support the expansion of low-carbon manufacturing supply chains across the UK. This means that GIGA’s total funding will reach almost £1.1 billion.
According to the government, the GIGA’s fund will be split between the clean energy sectors, with around £390 million earmarked to expand UK-based supply chains for electricity networks and offshore wind sectors. Around £390 million will be allocated to carbon capture, utilisation and storage and hydrogen industries, something the government revealed it was consulting on last week (28 February).
The remaining £300 million in funding will bolster the UK’s nuclear fleet, specifically in procuring a fuel known as high-assay low-enriched uranium (HALEU), which is crucial in powering high-tech nuclear reactors.
GIGA, which was announced during the 2023 Autumn Statement, is set to support domestic manufacturing in sectors including offshore wind, electric vehicles (EVs), batteries and more.
The government stated this would “enable the UK to seize growth opportunities through the transition to net zero, building on our world-leading decarbonisation track record and strong deployment offer”.
Chancellor of the Exchequer Jeremy Hunt said: “We’re sticking with our plan by backing the industries of the future with millions of pounds of investment to make the UK a world leader in manufacturing, securing the highly-skilled jobs of the future and delivering the long-term change our country needs to deliver a brighter future for Britain”.
Government allocates funding for EVs
Another key aim of the £360 million funding package from the Treasury is to spur growth in the electric vehicle (EV) sector.
To achieve this, a statement released by the government revealed that almost £73 million will be allocated for “cutting-edge automotive R&D projects to support the development of EVs”.
This is the second boost the UK’s EV sector has received recently following Tata Group’s announcement on Friday (1 March) that its battery business, Agratas, will develop a new battery gigafactory in Somerset, which is expected to be the largest in the UK.
As reported by Current±, the factory is expected to create 4,000 direct jobs and many more in the broader supply chain. The factory is expected to cost in the region of £4 billion, with engineering firm Stantec selected to design the facility.
The gigafactory, which will have an output of 40GWh, could supply almost half the projected battery manufacturing capacity required for the UK’s automotive sector, an area of the energy transition that continues to grow. Preliminary works on the site are in progress, with piling to establish the factory’s foundations set to start in Spring.
RenewableUK urges additional measures to support growing renewables
Although acknowledging that this new funding is a “positive step” by the UK government, the trade association RenewableUK has urged the government to build upon this by unveiling further measures to “accelerate the roll-out of renewables”.
Developing ports is one of the primary areas the association has called for further progress. Port infrastructure across the UK must be increased and accelerated to support the import of giant offshore wind turbines, it said.
According to RenewableUK’s analysis, “up to 11 ports around the UK will need to be transformed into new industrial hubs to enable the roll-out of floating wind at scale”.
Another area called into question by the trade association is the upcoming Contracts for Difference (CfD) auction. RenewableUK is urging the government to set an “ambitious budget and parameters” to maximise the amount of clean energy capacity that can be secured.
The government has previously emphasised the importance of supporting and expanding the CfD scheme, mainly to bolster GB’s net zero aims. It is also essential to ensure the scheme continues to offer attractive investment in the country’s energy transition, as seen in the previous auction round, where low strike prices saw no offshore wind projects bid into the scheme.
It is worth noting that the government has already started work to rectify its errors, such as raising the administrative strike price for offshore wind by 66% for the next allocation round – something that was welcomed by the wider industry.
Commenting on the new GIGA funding, RenewableUK’s chief executive Dan McGrail said: “The Chancellor has a great opportunity in his Spring Budget speech to build on growing investor confidence in the UK and put us ahead of our global competitors in the escalating global race to build new clean energy projects and, crucially, to seize new manufacturing and supply chain opportunities.
“The increase in GIGA funding to secure further private investment in green manufacturing jobs will enable us to supply more goods and services to projects here and aboard. It’s also good to see that nearly £400 million of that funding will be used specifically to grow our offshore wind supply chain and electricity networks.”
He added: “Worldwide demand for the high-tech components and services needed to build new projects is ratcheting up, so there’s never been a better time for the Chancellor to make Britain the best destination for international investment in renewables”.
