Recommendation 9

The government estimated in its 2021 Net Zero Strategy that £280 to £400 billion of public and private investment in new generating capacity would be needed by 2037 to decarbonise the power sector. These costs represent the construction costs for power generation only, and do not include the costs for all aspects of decarbonising the power sector, such as network construction or research and innovation on technologies.25 Private investment will be a major contributor to the financial capital required to decarbonise.26 A clear delivery plan could increase the confidence of investors to fund new infrastructure, which could reduce their costs of capital.27 We received written evidence from Energy UK that flagged a negative impact on investment in the UK, given it is seen as less favourable when compared to the USA and EU, and spoke of a coming ‘investment hiatus’ in the UK due in large part to uncertainty.28 The Department believes that the UK will never be able to compete financially with the USA; however, it believes the UK has the market mechanisms, business models and regulation to provide confidence to investors and attract the necessary investment.29 19 Qq 5, 41; C&AG’s Report, Figure 8 20 DPS0013 21 Qq 5–7; C&AG’s Report para 1.9 and Figure 8 22 Qq 7, 32, 42, 74; C&AG’s Report, paras 1.13 and 2.6 23 Q 39 24 Q 40 25 Department for Business, Energy & Industrial Strategy, Net Zero Strategy: Build Back Greener, 19 October 2021, page 99; C&AG’s Report, para 6 26 C&AG’s Report, para 2.17 27 Q 88; C&AG’s Report, para 11 28 DPS0019 29 Q 88 Decarbonising the power sector 11