The next parliament must focus on three key elements to avoid making a mess of energy policy: maintain stability; support new technologies; build consumer trust.
That was the key message from the Energy and Climate Change Committee as it set out its vision for the future of the UK energy system today.
Those cornerstones were based on the evidence of 91 written submissions to the committee.
Levies, contracts, carbon
The report called for prioritisation of the allocation of contracts for difference (CFDs) in the next parliament and longer term clarity on the Levy Control Framework, so that investors have greater visibility of how subsidies will be controlled. The Committee suggested at least seven years visibility was required.
As well as low carbon technologies, it also said that gas must continue to be incentivised in order to keep bills down.
Equally, the government must “push hard” for reform of the EU Emissions Trading Scheme “as soon as possible”, so that the EU ETS is not further undermined by the glut of permits remaining in play.
Energy efficiency flop, tech funding gap
Energy efficiency, demand-side response and reduction “have been the Cinderella of energy policy”, according to the report. The Green Deal has “largely failed”, while the demand-side companies “are justifiably concerned that the Government is not treating them equally with supply-side technologies”, said the Committee.
Government must level the playing field between generation and demand-side measures and “bring about a step-change in energy efficiency by adopting a policy that genuinely engages the consumer and drives down energy demand”.
Meanwhile, government must ensure that capital flows into research and development if new technologies are to help deliver policy goals of affordability, decarbonisation and security of supply.
While the Committee called for support of technologies such as CCS, it warned government not to base policies on the assumptions that it would be commercially viable in time to meet the UK’s carbon targets.
Come clean about the cost of decarbonisation
If the government is to build trust in a market where energy companies, and switching sites, are seen as profiting at the expense of customers it must build trust in both its policies and the energy companies delivering them, concluded the report. Government must also be honest about the costs of decarbonising the energy system or risk jeopardising everything it is working towards.
See the Fueling the Debate report here.
Put users at the heart of energy policy or watch it fail
UK firms with CHP facilities could be paid to stop exporting power
National grid urges big firms to offer demand side response, may pay more
European Commission’s power play means easier funding for energy efficiency
Decc remains confident of beating Tempus Energy’s legal challenge over demand side
CFD appeals may cost unsuccessful generators, Decc warns
Energy minister dismisses big company bias claims in CFD and capacity auctions
Another fine mess: Energy policy’s perverse outcomes mean ‘new Energy Act in 2017‘
Click here to see if you qualify for a free subscription to the print edition of Water, Energy & Environment, or to renew.
Follow us at @EnergystMedia. For regular bulletins, sign up for the free newsletter.
Lets hope Cinderella gets to go to the ball, because if policy focuses on generation as the answer to security, it will be even more financially ugly for decades to come. Increased energy efficiency/demand reduction/response cuts the need for excessive fossil back-up to renewables. They help deliver on security and carbon, and if using less is cheaper than building more, affordability. Efficiency/response has a financial cost. But SURELY more affordable than some of the multi billion pound contracts for new plant dished out without a competitive process? Sure, we need to replace aging plant. But the next administration MUST think long term & build an energy legacy, otherwise millions of people and the economy suffer.