UK Draft Energy Bill: the industry reacts

23 May 2012 (Last Updated May 23rd, 2012 09:57)

Reactions to the UK draft Energy Bill have focused on the urgency for new reforms to be adopted. Power technology gathers the views from the industry on this bill, including comments on how it may effect climate change and consumer costs.

UK Draft Energy Bill: the industry reacts

Bird & Bird corporate finance and climate change lawyer Matt Bonass

"The publication of the draft Energy Bill today is, of course, welcomed. However, its impact on investment and project development remains a concern as it is presented for pre-legislative scrutiny only at this stage. While this gives more time for debate on the details, it will do little to provide investors with the certainty they are looking for.

"There is still considerable uncertainty as to the final form of any secondary legislation, for example on CfDs."

"Further, while the draft Bill sets out the broad themes of electricity market reform, the devil remains in the detail and there is still considerable uncertainty as to the final form of any secondary legislation, for example on CfDs [Contracts for Difference] and the capacity market.

"In looking to promote certainty, the government may be accused by some of further muddying the waters. We are in the middle of a consultation on the banding of renewable obligations certificates. Added to this is the introduction of so-called 'investment instruments', quasi CfDs which we are told come with no guarantee of converting into the real thing."

WWF UK head of energy policy Nick Molho

"What's needed is for the Government to state a clear ambition for renewable energy in the UK beyond 2020."

"As made clear by the Committee on Climate Change, decarbonising the UK's power sector by 2030 is an absolute necessity if we are to stand any chance of meeting our legally binding commitments under the Climate Change Act. The Energy Bill provides the UK Government with a unique opportunity to do just that.

"What's needed is for the Government to state a clear ambition for renewable energy in the UK beyond 2020 and to provide financial support mechanisms that are specifically designed for the renewables sector. As it is, it looks like the process has been rigged for nuclear."

Institution of Mechanical Engineers' power division chairman Alistair Smith

"The Energy Bill is not just welcome but essential if the UK is to maintain a secure energy supply."

"The Energy Bill is not just welcome but essential if the UK is to maintain a secure energy supply, while at the same time cutting carbon emissions at an affordable cost to the consumer. Although this Bill effectively kills off the idea of a truly open UK electricity market, this legislation is necessary in order to encourage companies to build a balanced electricity generating mix.

"If these reforms are rejected by the power industry because they don't like certain elements, it may be time for the Government to consider re-taking control of this essential element of our national infrastructure. The UK needs certainty now if we are to avoid jeopardising our security of supply in the relatively near future."

CBI deputy director general Dr Neil Bentley

"We are still some way from having a detailed picture of how the electricity market will look in the future."

"While it is reassuring to see some progress on the Energy Bill, it's now important that Parliament not only gets it right, but does so as a matter of urgency.

"The clock is ticking to create the market certainty that will unlock billions of pounds of private sector investment, generating many new jobs across the UK, and securing an affordable supply of energy,"

"We are still some way from having a detailed picture of how the electricity market will look in the future. With major investors waiting in the wings, these details are needed as soon as possible."

Redpoint Energy director Duncan Sinclair

(Redpoint Energy is currently merging with Baringa Partners) "Baringa Partners welcome the Government's aspiration to move towards a level playing field for low carbon generation, which is critically important to promote competition between, and within technologies, and ultimately driving down the costs of low carbon generation such that it can compete with the fossil fuel alternatives, at least for baseload power.

"The Government needs to move as fast as possible to develop the next layer of detail if the programme is to remain on track."

"On the capacity mechanism, there is still debate as to whether or not an intervention is required to promote security of supply. However, having announced that this will be part of the EMR package if needed, we believe that the Government should move ahead and implement it as soon as possible since the uncertainty will lead to an investment hiatus and precipitate the very need for that intervention.

"As a package, some in the industry may bemoan the complexity and lack of detail. But reform of this scale is necessarily complex. Certainly the Government needs to move as fast as possible to develop the next layer of detail if the programme is to remain on track. Greater clarity is also needed on how the EMR proposals will sit alongside other major industry reforms such as Ofgem's liquidity proposals."

TreeGreen's John Sheppard

"We would like to see more steps being taken to reduce energy consumption nationwide - such as the Green Deal."

"The Government has stressed the need for increased energy capacity, but has given little consideration to improving efficiency, which is just as important. We would like to see more steps being taken to reduce energy consumption nationwide - such as the Green Deal."

"Also, while there is a clear and undeniable need to support renewable energy, we question the approach outlined in the bill which appears to be increasing the cost to the consumer at a time when the number of households in fuel poverty continues to rise."

Institution of Engineering & Technology's Robert Sansom

"We are surprised that no reference is made to demand in the announcement made today."

"We are surprised that no reference is made to demand in the announcement made today. Support for low carbon generation will inevitably result in higher prices for consumers, but these price increases can be offset by improvements in energy efficiency, thereby reducing energy consumption."

"In addition demand has a crucial role to play in reducing the amount of capacity required. The reforms to the electricity market must recognise this role and ensure incentives are available to reward customers accordingly."

Moorhouse head of Energy and Utilities Nick Woodward

"Energy businesses must do more to develop the skills needed within their organisations to cope with change."

"Estimates are that around £110bn has to be spent on building new power generation and £40bn on transmission/distribution infrastructure over the next decade to ensure that we can access the power we need to be a robust, low carbon economy. There is only one place this money can come from - British households. But not only is finding the money a challenge at the moment, it is also unclear where the capacity in skills to deliver these programmes will come from."

"We recently undertook a survey of businesses in the UK to find how well they were coping with change. This found that less than half measure the benefits of the investment they make, and many struggle to find the skills they need to deliver their programmes of work. It found that many change programmes fail to respond to changes in the market, set off on poor foundations and do not secure the buy-in of key stakeholders. Energy businesses must do more to develop the skills needed within their organisations to cope with change."

Institute of Directors economic senior advisor Corin Taylor

"It looks like an overly-complex way of delivering much-needed investment in Britain's energy infrastructure."

"Businesses need clean, secure and affordable energy, but we're concerned that the draft Energy Bill may fail to deliver."

"We need to see a technology-neutral approach adopted as soon as possible, so that the cheapest low-carbon energy sources are prioritised, but the Bill confirms that the Government will try to pick energy winners for at least another decade. We hope that the contracts for difference framework will succeed, but it looks like an overly-complex way of delivering much-needed investment in Britain's energy infrastructure."