Did the energy industry get what it wanted from UK electricity reforms?

Two days ago, before Chris Huhne announced his package of measures to shake up the UK electricty market, a group of energy industry insiders and experts told Energy Source what they wanted to see from the reforms. Now that we know the details, and people have had time to figure out what they mean, the question remains, did they get what they wanted?

Paul Goldby, chief executive, Eon: Low-carbon obligation

We had looked for a focused measure like some form of low-carbon obligation to bring forward this new investment and, at this early stage, it looks as though the proposals around this – a contract for difference or a premium feed in tariff – could well fit the bill. However, we need to look at the picture as a whole to ensure there are no unintended consequences for existing plant and the market as a whole.

Nick Molho, head of energy policy at WWF: Emissions performance standard and CCS

WWF disagrees with the proposal that guaranteed prices should be offered to the nuclear industry, as this amounts to indirect subsidies paid for by consumers to support a mature technology. The focus for this government should be to primarily support the renewables industry, that offers the greatest potential to create a substantial amount of new jobs, and help our economic recovery.

WWF is very disappointed by government proposals to introduce a watered down emissions performance standard at either 600gCO2/Kwh or at a level of 450gCO2/Kwh that would not apply to plants qualifying under the CCS demonstration programme. Current proposals will allow the continued operation of fossil-fuel plants that continue to emit large amounts of CO2, and could curtail the emission reduction effectiveness of carbon capture and storage projects, paid for by the bill payer. This represents a significant rowing back from the government on earlier promises.

Ronan O’Regan, director, PwC renewables and clean tech: New nuclear with balanced incentives

What’s important is balance, so the reforms don’t end up favouring one technology over another. There is only one pot of capital, so if the reforms end up favouring, for example, nuclear, it risks putting off investment in other areas. It does not specifically address the grid infrastructure investment needed, which will be an area of concern for power companies.

Juliet Davenport, CEO, Good Energy (100% renewable electricity provider): Zero-carbon aim and secure carbon price

We are pleased to see that Chris Huhne has provided an ongoing commitment to feed-in-tariffs for small scale generators, given the Government’s proposed reforms around large scale low-carbon generation schemes in today’s EMR announcement.

These tariffs are essential in driving renewable energy generation amongst consumers and have another benefit of providing households with an early opportunity to get involved in demand side management. Microgeneration has a vital role to play in reaching the Government’s commitment to achieving at least a third of energy generation from renewable energy by 2020.  We’re pleased that the Government recognises this and we look forward to having the opportunity to contribute to the wider consultation.

Chris Stubbs, director at WSP Environment & Energy (consultancy): Gradual carbon floor price

We were keen to see proposals that introduce a carbon floor price gradually, and also which provide long-term confidence. The consultation covers both points – setting out proposals for gradual increase in tax through withdrawing the climate change levy exemption and then to 2030.  So long as future governments stick to these commitments, this provides much more basis for long term decisions.

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