Wednesday, 23 May 2012

A draft Electricity Market Reform Bill has been published in the UK for comment

The UK’s Department of Energy and Climate Change (DECC) has published a draft of the anticipated Energy Bill. The Bill is described as establishing a legislative framework for delivering secure, affordable and low carbon energy.

The primary focus of the Bill is Electricity Market Reform (EMR). The Bill puts in place measures to attract the £110bn investment that the government believes is needed to replace current generating capacity and upgrade the grid by 2020, and to cope with a rising demand for electricity.

One of the main elements is the Feed-in-Tariffs with Contracts for Difference (CfDs) - long-term instruments which the government believes will provide stable and predictable incentives for companies to invest in low-carbon generation. The Bill also covers energy security, the move to renewables, and emissions performance standards for next generation power stations.

In addition to EMR, the Bill has measures to ensure that the Government and market regulator Ofgem are working to the same ends through a Strategy and Policy Statement (SPS). Other aspects include formalising nuclear regulation, in the form of the interim Office for Nuclear Regulation (ONR) and enabling the sale of the Government Pipe-line and Storage System (GPSS).

This is only a draft Bill, though. The Energy and Climate Change Committee will examine it with a view to reporting back soon after the House rises for the summer recess. The idea is that the Committee’s conclusions and recommendations can feed into a real Bill in the autumn. The Committee is asking for written evidence on any aspect of the draft Bill (as soon as possible, since time is tight), and plans to hear oral evidence in June.


Why is time tight? Surely one of the most important pieces of legislation that the government will introduce and yet there’s just a couple of weeks to submit written comments.

I have no doubt there will be lots of input, though. Many organisations and companies have views as well as vested interests in the final legislation. I’ve received a couple in the last 24 hours:

“The finalisation of Electricity Market Reform has been long awaited and it is great to see this hugely significant piece of legislation published.  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 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, analyse, manage’ as the principle we need to follow. Some areas of the network such as the LV section are currently not monitored continuously which needs to be addressed if a truly smart grid is to be realised.  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.”

Mark England, CEO, Sentec

“The Draft Energy Bill is markedly lacking in further policy on efficiency, despite that being the fastest and cheapest way for the UK to bring down bills and emissions.

Of course, power generation is an essential aspect of driving the low carbon economy, but it needs to be driven in tandem with energy use mitigation.

Government has set out its ambitions for the smart meter roll out to address UK energy efficiency.  A clear strategy that tackles the issues that coincide with such a challenging roll out, such as security and interoperability, will be key to helping the nation make full use of demand management technologies. The provision, management and interpretation of accurate consumption data that smart meters provide will be the difference in the UK’s search to decarbonise the energy supply chain.

As stated in the impact assessments, Smart metering brings the opportunity to save around 10% on energy bills and concentrating on efficiencies may help the UK reduce the expenditure that is required in power generation.”

Nigel Hughes, Director, Itron

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