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UK Hopes to Attract £110 Billion Investment with Energy Market Reform

On Wednesday, Ed Davey, the British energy secretary, announced the release of the draft plan for the UK government’s electricity market reform.

The Electricity Market Reform Delivery Plan, as it is known, will not be finalised until September, but this latest draft aims to encourage the £110 billion capital needed to upgrade the country’s electricity grid by 2020, by offering more certainty to potential investors.

Enthusiastic about the new plan, Davey stated that “no other sector is equal in scale to the British power market, in terms of the opportunity that it offers to investors, and the scale of the infrastructure challenge.

Related article: Future of UK Offshore Wind Sector in Jeopardy

The Delivery Plan will provide investors with further certainty of government’s intent, so that they can get on and make crucial investment decisions that are supporting green jobs and growth.

The strike prices we have set will make the UK market one of the most attractive for developers and investors in renewable energy. It is necessary to support technologies in the early stages of their development, but we are looking all the time at how we reduce the costs for consumers.”

The UK has received criticism for its lack of dedication to increasing the renewable capacity in its energy mix, and therefore is way off achieving its 2030 climate targets. Davey seems to think that this reform will turn that around.

“As well as being good for green jobs and growth, what we are doing will protect our environment. The new strike prices [the fixed price at which renewable energy can be bought or sold] will mean that renewables can contribute more than 30% of our power mix by 2020, putting us on track to seeing significant decarbonisation of the power sector by 2030 and meeting our wider climate targets.”

Related article: The UK is Way Off Hitting its 2020 Renewable Energy Target

Unfortunately not everyone is as pleased with the reform as Davey. Roger Salomone, the head of Business Environment Policy at the EEF, remarked that “would-be investors are gradually getting the details they need to take forward projects. But industrial consumers will be dismayed that there is still no concrete plan for moving to a competitive market for low carbon electricity. What’s urgently needed is a clear timetable setting out when technologies in receipt of significant subsidies, funded by the consumer, will stand on their own two feet.”

Oliver Hayes, from Friends of the Earth, said that in the decision to put natural gas at the centre of the new reform meant that the Department of Energy and Climate Change (DECC) is ignoring all advice given by the Committee on Climate Change, and will probably prevent the country from achieving its emissions reduction target.

By. Joao Peixe of Oilprice.com



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