Energy reforms passed through Parliament at long last


Up to £110 billion of private sector investment in the electricity sector is said to be unlocked with the publication of the Electricity Market Reform Delivery Plan. The investment isneeded by 2020 alongside crucial measures to improve the security of electricity supply, which will be made possible now that the Energy Bill has received Royal Assent (18th December). This provides investors and industry with the confidence they need to invest in the energy sector and also places a legal obligation on British governments to ensure the UK’s energy generating capacity is maintained while at the same time reducing emissions. This package of measures will support up to a quarter of a million jobs, 200,000 of which are ‘green’ jobs in the renewable energy sector.


There has already been over £31 billion of investment announced in renewable electricity generation projects since 2010, and this package is expected to attract around £40 billion of investment in renewable electricity by 2020.

Secretary of State for Energy and Climate Change, Edward Davey said;  “We have driven the Energy Bill through Parliament on time to send out a clear signal to investors and industry.  We have delivered the certaintythey need and confirmed Britain’s position as one of the most attractive countries in the world to invest in energy generation.”

The first EMR Delivery Plan sets out the strike prices for renewable technologies under Contracts for Difference (CfD) as well as the analysis underpinning these decisions.

Accompanying the Delivery Plan is a revised version of the CfD, with improvements made to the contract terms to further support the ability of developers to bring forward investment at lower cost to consumers.

In line with new EU guidelines on competition and to deliver best value for money to the taxpayer, the Government is considering introducing competition for more established low carbon technologies when the CfD regime is introduced. This will be decided in early 2014.

The Government has sent out draft investment contracts to the sixteen renewables projects that have progressed to the next stage of the ‘FID Enabling for Renewables process’.  Nine projects have been told that they are provisionally affordable under the budget caps announced on 4 December, but all are able to remain in the process until it is completed, and contracts are awarded, in spring 2014.

A Capacity Market is being introduced which works by providing regular payments to capacity providers so that they are available to and produce energy when capacity is tight, or face penalties. The Government has confirmed the level of system security that will be required under the mechanism.

Ofgem has also approved National Grid’s request to develop new services to ensure we have sufficient capacity in the period before the Capacity Market is operational. This will see existing and mothballed facilities being available to generate power to meet additional demand as necessary.

Maria McCaffery, Chief Executive of RenewableUK said: “This has been a long and sometimes arduous process for everyone involved but we recognise that the Energy Bill has now become legislation and the framework for development beyond 2017 is known.

“There are issues still outstanding to be resolved through secondary legislation, and in the face of very challenging strike prices there is still much work to be done between Government and industry to ensure that obstacles are removed and much needed clean and domestic sources of energy can come forward over the next decade”.


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