22 - Tuesday 22nd May
This archive of news stories on energy related topics came from RSS feeds from the most relevant government institution. These press releases date from 23rd May 2012 and no guarantee can be provided on the accuracy of these stories from the Green Deal Group. Click on the relevant links for more information and the corresponding article.
- Written Ministerial Statement: Draft Energy Bill (Pre-Legislative Scrutiny)
Edward Davey, Secretary of State for Energy and Climate Change
I am pleased to be publishing a draft of the Energy Bill today, in order for Pre-Legislative Scrutiny to be carried out on it.
The draft Bill includes measures necessary to reform the electricity market to deliver secure, clean and affordable electricity.
At the heart of our Electricity Market Reform (EMR) measures are Feed-in-Tariffs with Contracts for Difference (CfDs), long-term instruments which will provide stable and predictable incentives for companies to invest in low-carbon generation. CfDs are more affordable than alternative incentives and will mean a better deal for consumers. Through the work on Final Investment Decisions (FID) Enabling we are committed to working with developers to enable some of this investment to come forward in advance of the CfD regime coming into force, and the Bill contains measures to support this process. This will be complemented by a Capacity Market that will, if required, provide security of electricity supply by ensuring sufficient reliable capacity is available. Measures relating to Conflicts of Interest and Contingency Arrangements will ensure that the System Operator which will deliver these schemes is appropriate. Renewables Transitional measures will ensure that existing investments under the Renewables Obligation remain stable. Finally, an Emissions Performance Standard (EPS) will limit carbon dioxide emissions from the most polluting fossil fuel power stations by setting appropriate standards for all new fossil fuel powered generation. Taken as a whole, EMR will enable large-scale investment in low-carbon generation capacity in the UK and deliver security of supply, in a cost-effective way.
In addition to EMR, the Energy Bill will also improve regulatory certainty by ensuring that Government and Ofgem are aligned at a strategic level through a Strategy and Policy Statement (SPS), as recommended in the Ofgem Review of July 2011.
The Bill also ensures that the Office for Nuclear Regulation will be fully able to meet the future challenges of regulating the nuclear industry, as the first new power plants since the 1980s are built.
Finally, the Bill contains provisions that will enable the sale of the Government Pipeline and Storage System (GPSS). The Parliamentary Under Secretary of State for Defence Equipment, Support and Technology, at the Ministry of Defence is laying a separate Written Ministerial Statement today
I am confident that measures contained in this Energy Bill will enable us to keep the lights on, bills down and air clean. I am pleased to commend it to the House today for PLS and will look forward to the publication of the Energy and Climate Change Select Committee’s report.
- Energy Bill 2012
Tue 22nd May 2012 12:02pm - Davey: Electricity Market Reforms will keep the lights on, bills down and air clean
Keeping the lights on, consumers energy bills down and creating cleaner electricity to help tackle climate change, are the three goals of ambitious draft electricity market reform legislation published today.
The reforms are designed to provide investors with transparency, longevity and certainty in order to attract £110 billion of investment to bring forward new low-carbon power generation for the 21st Century.
Over the next decade, around a fifth of existing power generating capacity will come off-line.
Without these reforms, we could in the future see blackouts affecting millions of homes in some years. We would also be more dependent on importing oil and gas from overseas, this could present geopolitical risks and make our energy supply unsecure.
Demand for electricity will grow by 2050 as it is increasingly used to power our transport and domestic heating.
This leaves the UK with an energy gap which needs to be filled.
Secretary of State Edward Davey 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.
“These reforms will ensure we can keep the lights on, bills down and the air clean.
“The reforms will also be better for the economy, leaving us less vulnerable to rising global energy prices and supporting as many as 250,000 jobs in the energy sector.
“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”.
The draft Energy Bill proposes radical reform to the electricity market to attract the £110 billion required to build new low-carbon capacity.
It will be designed to encourage a balanced portfolio of renewables, new nuclear and Carbon Capture and Storage (CCS), and to ensure that these technologies can compete fairly in the market-place.
The main elements of the Bill are:
National Grid is to be appointed as the delivery body for EMR, to provide analytical basis for Government decisions and to administer two new market mechanisms:
- A new system of low-carbon generation revenue support – a feed-in tariff with Contracts for Difference (CfDs). These CfDs will make investment in clean energy more attractive by removing long term exposure to electricity price volatility. They will stabilise returns for generators at a fixed level known as a strike price. It will also insulate consumers by clawing back money from generators if the market price is higher than the strike price. The first strike prices will be published within the Delivery Plan in 2013.
- A Capacity Market will be established to reduce the likelihood of future blackouts by ensuring there is sufficient reliable capacity to meet demand, ensuring that consumers continue to benefit from reliable electricity supplies at an affordable cost.
These mechanisms will be supported by:
- An Emissions Performance Standard (EPS) that will provide a regulatory backstop to prevent construction of new coal plants which emit more than 450g/kWh i.e. the most polluting form of electricity generation.
- The Carbon Price Floor – this was announced by the Chancellor in the 2011 Budget and was introduced in the Finance Bill. This provides a clear economic signal to move away from high carbon technologies by increasing the price paid for emitting carbon dioxide. It places an initial value on the price of carbon of around £16/tCO2 (2009 prices) in 2013, which will rise to £30/tCO2 (2009 prices) by 2020.
With or without reform, household electricity bills are likely to increase over time, driven primarily by rising fossil fuel prices.
However, electricity market reforms will help to reduce the amount that bills will increase. As a result of these reforms, electricity bills are estimated to be, on average, 4% lower over the next two decades than they would otherwise have been. Average bills for businesses and energy intensive industries will also be lower than without reform.
Gas will continue to play an important role in the transition to a low-carbon economy, to provide flexibility and help maintain security of supply. A separate strategy on the role of gas will be published in autumn 2012.
Notes for Editors
- The draft Energy Bill and accompanying further information can be found on the DECC website.
- The full Bill, once introduced into Parliament, is expected to achieve Royal Assent in 2013, so that the first low-carbon projects can be supported in 2014. The Bill was introduced in draft to allow pre-legislative scrutiny. This will speed up its passage through Parliament and ensure for more robust legislation. This has been welcomed by the ECC Committee.
- Government will consult on the first set of CfD strike prices in 2013 and will announce the prices in the second half of that year within the 2013-2018 Delivery Plan, giving developers up to a year of visibility of prices ahead of them coming into force in mid-2014.
- All of the policies in EMR extend to Scotland and Wales. Energy policy is devolved to the Northern Ireland Executive which has agreed that extension of CfD, FID Enabling and EPS provisions will apply to Northern Ireland.
- The draft Energy Bill also contains proposals to: Create an independent, industry financed statutory regulator, the Office for Nuclear Regulation; Enable the sale of a Ministry of Defence asset, the Government Pipeline and Storage System (GPSS) and introduce a Strategy and Policy Statement which would set out the Government’s strategic priorities for the energy sector in Great Britain, describe the roles and responsibilities of bodies who implement or are affected by GB energy policy and describe policy outcomes which are to be achieved by the regulator and the Secretary of State when regulating the sector.
Tue 22nd May 2012 10:47am
