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The white paper from the Department of Energy and Climate Change sets out proposed reforms to the electricity supply market.
Dr Simon Harrison from the Institution of Engineering and Technology , said:
“Whilst we recognise the need to support the market, we remain concerned about excessive complexity and the potential for perverse incentives. We are also interested to note that there is no mention of engineering anywhere in the entire white paper.”
John Loughhead, Executive Director of the UK Energy Research Centre, said:
“The UK Energy Research Centre welcomes the attention that the government has given to tailoring the contracts for difference to particular technologies, as nuclear power has very different needs from small scale wind; however more work is needed on the detail of the design of feed-in tariffs.”
Prof Jim Watson, Director of the Sussex Energy Group, said:
“There are no great surprises in this White Paper, and it is disappointing that the government have not taken the opportunity to remove unnecessary complexity. Some complexity is necessary, but there are still too many policies in this package to achieve the government’s stated aims. The Emissions Performance Standard remains as part of the plans, despite it being superfluous.
“Having said this, I welcome the further detail provided on how the proposals will be implemented. This was a big gap in the original consultation document. The suggestion that the allocation of low carbon contracts will be synchronised with the Committee on Climate Change’s 5-yearly budgets, and subject to regular reviews, is a very good one. I’m also pleased that the capacity mechanism is subject to further consultation. It is not clear to me that this is necessary yet, and careful thought is required before going down this road.
“One of the important tests of the White Paper’s success will be the extent to which the reforms support both centralised low carbon generation and more decentralised action – whether through distributed sources of generation or in energy efficiency and demand side flexibility. There is a lot of discussion of these options in the White Paper, but it is not clear yet that the supportive words are backed up by sufficient policy action.”
Dr Robert Gross, Director of the Centre for Energy Policy and Technology at Imperial College London, said:
“The direction of travel is welcome. The current market suits investment in gas-fired generation and very little else. Long term fixed price contracts could help get the kind of investment the UK needs. Reliance on gas means prices will be volatile. Power prices have gone up by 80% in recent years because of gas prices. Nuclear and renewables cost more to build but are cheap to run. They offer the prospect of more stable prices – a bit like a fixed rate mortgage.
“Getting investment into low carbon generation will be difficult however, since the UK is competing with countries all around the world for scarce capital. It is therefore unfortunate that the government has come up with a complex set of arrangements when investors have been calling for simplicity, like the simple feed in tariffs used in Germany. It should avoid a ‘one size fits all’ approach. Nuclear power has very different needs from small scale wind. Simplicity and investability should be at the heart of the government approach.”
Prof Catherine Mitchell, Professor of Energy Policy at University of Exeter, said:
“The White Paper may throw a few crumbs of comfort to the renewables industry, but in reality it is all about getting new nuclear power stations built. The lack of meaningful measures to encourage innovation and new entry, or to manage demand are a lost opportunity which will have long term consequences on the shape and cost of our electricity system. Today’s White Paper will cost consumers and the environment dear, and can only be seen as a short term package to support the nuclear industry in general, and EDF in particular.”
Dr Tim Fox, Head of Energy and Environment at the Institution of Mechanical Engineers, said:
“The reforms announced today are a necessary step to help put us on course to delivering an energy system which is both secure and low carbon. But the energy price rises we are already seeing, and are likely to see more of for many years to come as a result of these reforms, will be painful for UK householders and industry.
“Measures must be taken to protect vulnerable consumers and strategic industries, and government needs to ensure it doesn’t force energy-intensive industries out of the UK and into countries with less ambitious emissions reduction targets. That would be of benefit to neither the UK economy nor the environment.”