DECC Releases Electricity Market Reforms Draft

DECC Releases Electricity Market Reforms Draft

Edward Davey, Secretary of State for Energy and Climate Change says the bill “includes measures necessary to reform the electricity market to deliver secure, clean and affordable electricity. At the heart of our Electricity Market Reform (EMR) measures are Feed-in-Tariffs with Contracts for Difference (CfDs), long-term instruments which will provide stable and predictable incentives for companies to invest in low-carbon generation.”

Davey, who states CfDs are more affordable than other incentives and are a better deal for consumers, explains that “Through the work on Final Investment Decisions (FID) Enabling we are committed to working with developers to enable some of this investment to come forward in advance of the CfD regime coming into force, and the Bill contains measures to support this process.” 

This Bill, designed to establish a legislative framework for delivering secure, affordable and low carbon energy, includes provisions for Contracts for Difference to provide stable and predictable incentives for companies to invest in low-carbon generation; Investment Instruments that enable early investment in advance of the CfD regime coming into force; Capacity Market that ensure the security of electricity supply; Conflicts of Interest and Contingency Arrangements to ensure the institution that delivers these schemes is fit for purpose; Renewables Transitional for investments under the renewables obligation scheme; and Emissions Performance Standard to limit carbon dioxide emissions from new fossil fuel power stations.

The Energy Bill will also ensure that the “Government and Ofgem are aligned at a strategic level through a Strategy and Policy Statement (SPS), as recommended in the Ofgem Review of July 2011.”

Davey adds: “Taken as a whole, EMR will enable large-scale investment in low-carbon generation capacity in the UK and deliver security of supply, in a cost-effective way.
In addition to EMR, the Energy Bill will also improve regulatory certainty by ensuring that Government and Ofgem are aligned at a strategic level through a Strategy and Policy Statement (SPS), as recommended in the Ofgem Review of July 2011.”

Sentec CEO Mark England, says the finalization of the Electricity Market Reform is much welcome. “The EMR highlights the government’s commitment to cleaner energy and its dedication to deliver secure, clean, and affordable electricity, and ensure prices are fair. It’s great to see the government looking for ways to encourage renewable generation and reduced energy consumption.”

However, England adds: “All these technological changes will put an immense strain on our national grid. For the network to cope with the strain, careful investment is needed. Priority areas that need to be considered include successful management of the extra stresses on the grid, and a focus on measure, analyze, manage as the principle we need to follow. Some areas of the network such as the LV section are currently not monitored continuously which need to be addressed if a truly smart grid is to be realized. Intelligent systems will also need to be deployed to get the important information and alerts out of the data produced when the DECC smart meter rollout is complete.”

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