Green industry pours scorn on House of Lords electricity market paper

A new House of Lords report which finds that Government support for low-carbon technologies has led to rising prices for electricity consumers has been labelled "confused" and "misconceived" by sections of the green community.

BEIS insists its top priority is to make sure UK families and businesses have secure, affordable energy supplies

BEIS insists its top priority is to make sure UK families and businesses have secure, affordable energy supplies

The electricity market paper, published today (24 February) by the cross-party Economic Affairs Committee, laments the “constant intervention” by successive Governments which las led to “an opaque, complicated, and uncompetitive market that fails to deliver low-cost and secure electricity.”

Ministers should seek to address the narrow amount of spare capacity in winter months, the report says, and rising domestic electricity bills which it highlights has gone from the second to seventh cheapest in Europe in just over a decade.

The Economic Affairs Committee chairman Lord Hollick commented: “Poorly-designed government interventions, in pursuit of the decarbonisation, have put unnecessary pressure on the electricity supply and left consumers and industry paying too high a price.

“The Government must make sure that the security of the UK’s energy supply is the priority of its energy policy,” he added. “Affordability must not be neglected and decarbonisation targets should be managed flexibly.”

‘Backward-looking’

The Government’s Climate Change Act 2050 target to reduce emissions by 80% should not be set on a “rigid path to be achieved at all costs”, according to the report, alluding to the linear approach mandated by the carbon budgets.

The report suggests that the Contracts for Difference (CfD) scheme for renewables has left the UK short of capacity, and calls for a market-driven, technology-neutral electricity auction free from Government intervention to ensure that consumers pay the lowest price for low-carbon power. The Economic Affairs Committee calls for a new Energy Commission to ensure competitive auctions have independent oversight.

Green organisations have been quick to denounce the findings of the report, with environmental law firm ClientEarth labelling the Lords’ take on the Climate Change Act as “confused” and “misconceived” and that it “seems to paint the law as part of the problem, rather than the best tool we have to get UK emissions under control”.

“The report even seems to hint that the Paris Agreement might somehow lead to weaker targets in the UK,” ClientEarth climate lawyer Jonathan Church said. “In fact, the question for the UK in the coming months is how do we improve our national targets to bring them in line with the increased ambition agreed in Paris? There is no room - or indeed rationale - for the kind of ‘flexibility’ that the report calls for.”

Despite the latest statistics showing that low-carbon technologies are now reaching cost-parity with fossil fuels, the report claims that “the generation of electricity from fossil fuels is cheaper than renewable sources…[It] has always been, and remains cheaper.”

This suggestion was strongly refuted by Paul Massara, chief executive of North Star Solar and former boss of RWE npower, who said the report was “backward-looking” and produced many “out-of-date” claims.

"The Committee is wrong in claiming that electricity from fossil fuels is always cheaper than that from renewable sources, or that low-carbon sources of power are ‘chronically unreliable'," Massara said. "In reality, renewables like solar or onshore wind are already cost-competitive with fossil fuels in many parts of the world, as costs have plummeted with increasing deployment.

“What the Committee doesn’t seem to understand is the wholesale transition that our energy system, like those of other countries, is undergoing. We’re rapidly moving towards a smart, flexible grid dominated by clean sources of energy, and employing new technologies like storage and demand-side measures to boost security and cut energy waste.”

Reliable supply

The report’s concerns about the scarce amount of spare capacity contrasts with the National Grid’s latest Winter Outlook report, which found that the risk of power cuts are now "exceedingly unlikely" thanks largely to £122m of contingency balancing reserve services helping to balance the electricity system.

Commenting on today’s report, Energy and Climate Intelligence Unit (ECIU) Dr Jonathan Marshall said: “Despite overwhelming evidence to the contrary, the Committee maintains that the threat of power cuts looms on the UK’s horizon, advocating yet another swing in policy to ensure that ‘the lights stay on’.

“In reality, the UK’s last generation-based output was back in 2008, the use of contingency measure to keep the lights on is at a long-term low, and implementation of the capacity market this coming winter ensures that a secure and reliable supply is simply no longer a concern.”

Earlier this week, it was revealed that work has begun on a new 1000MW power link between Britain and France, designed to reduce the risks of blackouts. The news comes amid speculation that the Government’s Emissions Reduction Plan will be further delayed.

In light of today’s paper, a BEIS spokesperson told edie that keeping the lights on “is non-negotiable”. “Our top priority is making sure UK families and businesses have secure, affordable energy supplies. Through our ambitious Industrial Strategy Green paper, we are investing in energy innovation to bring down costs over the long-term.

“We have made a firm commitment to reducing the UK’s carbons emissions, with over £56bn has been invested in renewables since 2012, and just last month we reiterated our commitment to spend a further £730m per year supporting new renewable projects over the course of this parliament.”

George Ogleby


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