Kelvin Ross, Deputy Editor, Power Engineering International
November 30, 2012 | 10 Comments
UK Energy Secretary Ed Davey Wednesday said "we are on the cusp of a renaissance in British energy" after unveiling the government's long-awaited Energy Bill.
Speaking to journalists after he had addressed the House of Commons, Davey said the Bill had “given industry and investors exactly what they need – consensus and political certainty.”
Earlier he had told Parliament that “the UK is open for energy investment”.
“The Energy Bill will attract investment to bring about a once-in-a-generation transformation of our electricity market, moving from predominantly a fossil-fuel to a diverse low-carbon generation mix.
“The Bill will support the construction of a diverse mix of renewables, new nuclear, gas and CCS, protecting our economy from energy shortfalls and significantly decarbonising our electricity supply by the 2030s as part of global efforts to tackle climate change.”
He said the UK energy challenge was “an economic opportunity there for the taking. It will stimulate supply chains and support jobs in every part of the country, capitalising on our engineering prowess and our natural resources, cementing the UK’s place at the forefront of clean energy development.”
Some headline aspects of the Bill were released last week, the most notable being that it would not include a decarbonisation target for 2030 – this has been deferred until 2016 – and a levy would allow utilities to raise £7.6bn by 2020 via customer tariffs to go towards low carbon investment.
This low carbon investment is intended to cover renewables and nuclear, however given that no new nuclear plants are expected to be online before 2020, Davey was today asked if most – if not all – of this money will go to renewables, especially wind. “Wind will get a lot of it,” was his reply.
A key plank of the Bill is contracts for difference, a long term contract between a government-launched counter-party firm and power companies which guarantees a sum – or strike price – for electricity generated. Davey said the strike price for nuclear would be calculated on a project-to-project basis, with the first project to be decided that of the EDF/Centrica consortium which proposes to build at Hinkley Point in England.
He also said that a decision on the way forward for shale gas in the UK would be revealed in Chancellor George Osborne’s Autumn statement next week.
Davey was speaking alongside his ministers Greg Barker and John Hayes, who was appointed recently to replace Charles Hendry. Conservative MP Hayes sparked fury among green groups and stories of a rift with Liberal Democrat Davey when he was quoted as saying “enough is enough” for onshore wind in the UK.
This afternoon, Davey said the men had “had disagreements” yet had “found a way to put together our views”. This he said “gave certainty to investors” and added: “I am delighted to have John on the team.”
When Hayes was pressed by a journalist to “name one onshore wind farm you approve of,” he instead reiterated Davey’s assurance that they were working well together.
As well as the contracts for difference and the formation of the counter-party, the key reforms to the electricity market in the Bill are:
The Energy Bill is expected to receive Royal Assent in 2013.
This story was originally published by Power Engineering International and was reprinted with permission.
Lead image: Wind turbines in field via Shutterstock.