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Slight changes to the Energy bill

29th November 2012

Power station

The key major elements of the UK Energy Bill announced by DECC just over a week ago remain intact;

  • No  2030 decarbonisation target
  • Cap on financial support for renewable generators - £7.6bn by 2020.

Although the Energy Bill has now been announced there is likely to be continued battles over the content for the foreseeable future.The bill provides the details of the electricity market reform.

Operators will receive subsidies for low-carbon electricity called and see the introduction of a capacity mechanism that will pay operators to ensure there is enough capacity to meet demand.

There is every eventually that we will see the introduction of amendments to force a 2030 decarbonisation target into the bill. However, as we stand the government are leaning more towards only powers to introduce a 2030 target after 2016 following advice from the Committee on Climate Change (CCC).

Impact assessments show DECC will update its modelling in the new year to consider a 2030 electricity sector emitting 200 grams of CO2 per kilowatt of energy generated, much more then the 50grams recommended by the CCC. The bill still has no measures on demand reduction or energy efficiency.

DECC has shown concerns that certain technologies such as large-scale solar projects could develop much quicker than other low-carbon options such as nuclear and to ensure the support budget is not used by such projects, they will be given a budget of their own. Within this, support will be allocated with a first-come first-served system.

Energy-intensive industries are to be exempted from electricity price rises due to the bill, how this will be achieved is still to be consulted and subject to state approval. Measures worth £250m have already been proposed to ease the burden on such industries but this is a necessity so that decarbonisation doesn't lead to deindustrialisation.