Keeping The Lights On: How will Britain transform its electricity market?

This week members of the youth panel attended the official launch of DECC’s White Paper on Electricity Market Reform (EMR) and the Renewables Roadmap- the government’s strategy to transform the UK’s electricity market by 2020. Here’s what we found out:

Over the next few decades, our country faces MASSIVE challenges in supplying us with electricity how and when we need it. [Lest we forget, that the UK must meet its EU targets of producing 15% of all energy from renewable sources by 2020 AND reducing our carbon emissions by 80% by 2050]. So, we were pretty hopeful that this eagerly awaited document would clearly map out the road to low-carbon energy heaven!

Overall, EMR aims to revitalise the UK electricity market, by encouraging a wider range of investors to provide up to £200 billion for improvements by 2020. We desperately need this investment to: revamp our old power stations, build shiny new renewable energy centres and make sure our electricity is distributed across the country efficiently over the foreseeable future.

Not to mention, that the more £££ invested in the UK market, the lower electricity prices could eventually be for consumers.. sounds good to us! This could also lead to more competition between energy providers to see who will be in the ‘energy mix’, with low-carbon technologies - like onshore wind and Carbon Capture & Storage(CCS)- given more financial support, and a chance to thrive.

The government believes that they have created the best possible plan to bring about real progress whilst addressing some of the concerns that many people have over how exactly the changes will happen. Any changes to our electricity market must consider DEMAND for electricity (which will continue to rise in future), AFFORDABILITY for consumers and ENERGY SECURITY (ensuring adequate supplies of energy now and in future) and DECARBONISATION (using way less fossil fuels and way more low-carbon sources of energy).

Key features of EMR strategy will be:

• The Carbon Price Floor: Setting a (higher) price on carbon, that will make investment in low-carbon technologies more cost effective and therefore increasing the incentive to invest in renewable energy now.

• Feed in Tariffs with Contracts for Difference: Additional long-term, fixed level payments would be made to energy providers for selling their electricity, as long as it is sold at a reasonable price to consumers. This guarantees the energy provider a profit, but also keeps prices from spiralling. Consumers could receive payments back from the provider IF prices rise above the agreed level.

Other interesting points from the White Paper launch:

The Emissions Performance Standard (EPS) limits the amount of carbon dioxide that any fossil fuel plant can emit for each unit of energy they produce. This will be set at 450g CO₂ per kWhr- unless the new plant is fitted with CCS technology, and this level will not be allowed to change in the future.

DECC officials suggested, that no new unabated coal power stations should be part of this strategy. However, the plan clearly shows the UK government is prepared to go it alone and will commit strongly to developing CCS (for coal and possibly gas power stations) as a big part of the transformation. By 2020, they could invest up to £1 billion in this technology, through projects across the UK. So, this means we will be living with coal-fired power in at least some shape or form, as a ‘transitional energy source’, according to the Secretary of State.

We were also delighted to hear from DECC that as part of the transformation, they will aim to make it easier for communities to take control of their energy supply – producing their own electricity, in their own way. Otherwise known as Microgeneration, this would potentially mean much smaller scale, community-owned electricity production in some areas.

Both Chris Huhne and Charles Hendry (Minister for Energy) seemed hopeful that lesser known low-carbon technologies such as Anaerobic Digestion, Bio-energy and Onshore Wind will also be able to play a much greater role in the energy mix, in the near future.

The minister also reaffirmed his commitment to TRAINING AND SKILLS DEVELOPMENT in addition to the above measures. The UK obviously needs a whole new workforce or enthusiastic, highly skilled people to make the energy revolution happen..

Bring on the Green Jobs!

The youth panel will be looking further into all of these plans over the coming months, through our work with the CCS and Land Based Renewables teams in DECC..watch this space!

Sasha-