Ahead of next weeks Energy Bill release the Government has revealed some of their plans. In a move to create a more self-sufficient UK energy market the new Bill will include a shake up of the electricity market and an increased focus on low-carbon energy.
The details released indicate clear steps which will see the planned electricity market reform up and running by 2014. The reform is expected to be the biggest transformation of the electricity sector in the UK since it became privatised in the 1990’s. In his announcement of the Bill details the Energy and Climate Change secretary Ed Davey said the focus was to ‘keep the lights on and bills affordable’ for the foreseeable future.
In a clear lean towards a low-carbon economy new measures were unveiled to support low-carbon project investment as part of the Energy Bill – the first major measure being the Contracts for Difference (CfD’s) scheme. The new scheme will offer long-term contracts for those investing in low-carbon energy projects. A fixed level price will be applied to bills, known as the strike price, protecting investors from extortionate energy bills should the market price of electricity continue to rise. Alongside the Contracts for Difference the Government have announced they will establish a new body to act as a single counterparty, designed to boost confidence in investors who are entering into long-term CfD’s. The counterparty will have the ability to raise funds from suppliers to meet costs, which will include payments to generators.
But despite the new bill favouring a low-carbon future, ministers have chosen to delay the crucial decision on the 2030 decarbonisation targets. The decision has been delayed until 2016 to coincide with the 5th carbon budget.