Concern and disappointment over Energy Bill announcement

Responding to the Government announcement on its long-awaited Energy Bill, Paul King, the UK Green Building Council CEO, said: 'It's very disappointing to see the totemic decarbonisation target has been punted into the long-grass, but agreement has been reached on some important areas, which should pave the way for more low-carbon investment.
'What is abundantly clear, but hasn't had the prominence it deserves, is the importance of energy efficiency, in buildings and across the economy, if we're to have any hope of meeting our carbon targets and keeping energy bills from spiralling out of control.'

The Renewable Energy Association said that, while the commitment of the necessary budget was welcome, the sector urgently required policy clarity in order to be able to invest.

'Today's announcement confirms that Government will be the counterparty to the new Contract-for-Difference regime - a key measure called for by the REA and warmly welcomed today.

'However, the REA is particularly concerned about generators' ability to sell their electricity under the new Electricity Market Reform (EMR) regime. In order to be financially viable under the new 'Contracts for Difference', generators must achieve the 'reference price' for their power sales. Evidence suggests this is unlikely to be achieved in the UK's illiquid power market. Unless the route to market is clear and assured, it will be difficult to see how projects can proceed and access the funds the Government has made available today.'

REA chief executive Gaynor Hartnell added: 'It is essential that there are enabling powers in the Energy Bill for a solution which guarantees renewables generators can sell their power at the reference price and that the details are worked up in order that a mechanism can be implemented if, as we anticipate, it proves necessary.

'We also want to see an increase to the maximum size threshold for small scale feed in tariffs. It is important that smaller investors have an appropriate and accessible support mechanism.'

Graham Meeks, director of the Combined Heat and Power Association, said: 'There is no escaping the fact that the costs of Electricity Market Reform will feed through to consumers' bills. But there has to be more to securing affordability than the crude sticking plaster of a Levy Control Framework.

'The enduring and rational response to rising electricity prices must be a sustained drive for investment in energy saving. Using less energy has a far greater and longer lasting effect than shaving a few pence off the price of it. It is vital that next week's Bill creates an energy market that will stimulate investment in demand-side measures, truly minimising costs to households and maximising the competitiveness of the UK economy.

'In practical terms this means that key features of EMR, such as the Capacity Mechanism, are designed to bring forward a raft of demand-side measures. This offers the most cost-effective means of safeguarding supplies of electricity to consumers.

'We look forward to working with the Government in bringing forward practical proposals in the Energy Bill that can deliver real energy savings - helping businesses' bottom line and making public sector budgets go further.'

Solar Trade Association CEO Paul Barwell said: 'After a damaging period of infighting, today the Government has given a strong signal of its commitment to the renewables industry with clear financial backing. However, we are still waiting to see if non-domestic solar will receive the support it requires to continue to reduce costs. By investing decisively today, our industry can deliver consumers real choice and freedom from rising energy bills before the end of the decade.'

While the STA is concerned that the Energy Bill works for smaller independent generators, the sector is currently focused on the crucial RO decision and the Feed-in Tariff. The STA has voiced concerns that the Renewable Obbligation (RO) consultation is focused on large 5MW+ schemes and that mid-sized roof-mounted solar risks falling through the policy framework. There is also concern that solar power will be treated in accordance with other technologies under the RO.

Paul Barwell said: 'Solar power can readily meet a third of UK electricity supply and it can put power into the hands of millions, not the few. This is a heavy-lifter technology. But solar power now requires close and careful attention in the policy framework to ensure it can access the funds made available today.'

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23 November 2012


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