Call for draft Energy Bill to maintain momentum
Businesses have broadly welcomed the release of the long-awaited draft Energy Bill, although warned that government must maintain momentum to ensure green energy growth and security of supply.
Released yesterday (May 22), the draft Energy Bill sets out reform plans to reduce greenhouse gas (GHG) emissions, improve energy security and keep energy bills down.
It also outlined plans to introduce a Feed-in Tariff (FIT) with Contracts for Difference (CfD) to be managed by the National Grid, a balanced portfolio of renewables, new nuclear and carbon capture and storage (CCS).
Energy minister Ed Davey said that the Electricity Market Reforms (EMR) aims to help the UK keep the lights on, energy bills down and create cleaner electricity to tackle climate change, as well as reducing the UK's reliance on the volatile global market.
He said: "Leaving the electricity market as it is would not be in the national interest. If we don't secure investment in our energy infrastructure, we could see the lights going out, consumers hit by spiralling energy prices and dangerous climate change.
"By reforming the market, we can ensure security of supply for the long-term, reduce the volatility of energy bills by reducing our reliance on imported gas and oil, and meet our climate change goals by largely decarbonising the power sector during the 2030s".
Renewable energy consultancy WSP Future global managing director David Nickols said that the bill must "maintain the momentum and provide detailed proposals for consultation promptly to meet its published timeline".
He added: "One of the real issues here is that it is just taking too long; every announcement is less clear and detailed than investors need it to be.
"Convincing investors that market conditions are stable and reliable is absolutely crucial to securing affordable and decarbonised electricity supply for the UK."
CBI deputy director-general Dr Neil Bentley agreed and said that while the bill is welcome that more details are needed to reassure and attract investors.
He said: "While it is reassuring to see some progress on the Energy Bill, it's now important that Parliament not only gets it right, but does so as a matter of urgency.
"The clock is ticking to create the market certainty that will unlock billions of pounds of private sector investment, generating many new jobs across the UK, and securing an affordable supply of energy."
"We are still some way from having a detailed picture of how the electricity market will look in the future, on which the success of these reforms depends. With major investors waiting in the wings, these details are needed as soon as possible."
Echoing this view was wind and marine renewables industry trade body RenewableUK director of policy Dr Gordon Edge, who said: "The timeline DECC has laid out looks very challenging to bring in wholesale change to the electricity market. As this is coming at a time when traditional energy sources are coming to the end of their lifespan, DECC needs to ensure that they continue to consult in order that an energy gap does not appear."
Meanwhile, engineering body the Institution of Engineering and Technology (IET) called for the bill to focus on reducing electricity demand in order to reduce the costs for consumers.
IET spokesperson Robert Sansom said: "We are surprised that no reference is made to demand in the announcement made today. Support for low carbon generation will inevitably result in higher prices for consumers, but these price increases can be offset by improvements in energy efficiency, thereby reducing energy consumption, which is also better for the environment.
"In addition demand has a crucial role to play in reducing the amount of capacity required. The reforms to the electricity market must recognise this role and ensure incentives are available to reward customers accordingly."
Also calling for lower bills for consumers, Consumer Focus director Audrey Gallacher, said: "The Government has a difficult and complicated challenge ahead of it in getting the Energy Bill right. It must walk a fine line between balancing the need to make our energy supply more secure and meet our green targets, while ensuring energy remains affordable for customers today and tomorrow.
"With a hefty price tag attached to the changes to be made, consumers need to be assured that not a penny of the funding that comes out of their bills will be wasted. That means the Government must guarantee that any subsidies for new power generation and any rate of return to suppliers are fair, and not overly generous at consumers' expense."