Electricity Market Reform plan attacked for ‘lack of vision’ beyond 2020

The draft EMR Delivery Plan, published yesterday, provides detail on the support mechanism for renewables investors, which aims to help incentivise up to £110bn of investment in new electricity infrastructure by 2020.

The draft plan includes details on the Contracts for Difference support mechanism, the methodology behind the level of draft strike prices for renewable electricity and scenarios for technology deployment and decarbonisation up to 2030.

Secretary of State, Ed Davey, said of the draft Delivery Plan: “No other sector is equal in scale to the British power market, in terms of the opportunity that it offers to investors, and the scale of the infrastructure challenge.

“The Delivery Plan will provide investors with further certainty of government’s intent, so that they can get on and make crucial investment decisions that are supporting green jobs and growth,” he added.

However, Davey’s comment’s did not convince campaign groups, who actually criticised the plan for its lack of long-term direction and for leaving out the certainty needed for companies to invest in low-carbon projects.

WWF head of climate and energy policy, Nick Molho, said: “The lack of a clear picture beyond 2020 is unsettling for companies wishing to invest in new low-carbon or supply chain projects, which take several years to build. If the Government wants to see investment flowing in the UK’s clean energy infrastructure, it must set a direction of travel and stick to it.

“The publication of scenarios which are not compatible with the recommendations of the Committee on Climate Change shows all too clearly that not all parts of Government are signed up to the low-carbon agenda. Given that Government has a key role to play in creating a market for low-carbon technologies, this is a real problem.”

WWF was particularly critical of the Government’s publication of widely different power sector scenarios for 2030, highlighting that one of them was completely inconsistent with the recommendations of the Committee on Climate Change and envisaged very little investment in low-carbon technologies after 2020.

“The publication of scenarios which are not compatible with the recommendations of the Committee on Climate Change shows all too clearly that not all parts of Government are signed up to the low-carbon agenda. Given that Government has a key role to play in creating a market for low-carbon technologies, this is a real problem.”

Adding to WWF’s concern’s, RenewableUK showed apprehension of the 2030 scenarios outlined in the delivery plan, most of which “see only a very limited role for development of wind during the 2020s”.

According to RenewableUK, based on predicted capacity by 2020 – in all but the high offshore wind scenario – the Government envisages very little additional capacity of both onshore and offshore wind. In some scenarios Government is predicting less wind energy than its existing high end estimate in 2020, it said.

The trade association warned that to reduce costs, the industry needed a large scale market and development at the levels outlined in the central scenario would lead to a substantial reduction in the potential for a number of jobs in the offshore wind industry describing the scenario as “bad for growth, bad for jobs, and bad for popularity.”

Deputy chief executive of RenewableUK said: “The long running electricity market reform process has taken the foot off the accelerator on investment; to remedy that we now need to see Government start going up the gears and locking in a renewable energy success story. The UK has a massive opportunity on offshore wind to get the jobs in as we are deploying the technology first and it would be tragic if we squandered that and let our European competitors take the spoils”.

Providing a manufacturing perspective, the EEF warned that the delivery plan needs further clarification to allow companies to move forward with low-carbon technologies.

EEF head of business environment policy, Roger Salomone, said: “Would-be investors are gradually getting the details they need to take forward projects. But industrial consumers will be dismayed that there is still no concrete plan for moving to a competitive market for low carbon electricity. What’s urgently needed is a clear timetable setting out when technologies in receipt of significant subsidies, funded by the consumer, will stand on their own two feet”.

According to a report published last month, UK businesses are “confused by the complex nature” of the Electricity Market Reform (EMR) and are concerned about the impact on competitiveness.

The report, ‘UK Business speaks: A call for clarity’, summarises the views of s businesses who are calling for more information on how the EMR will impact financial and administrative costs.

Leigh Stringer