by Brianna Crandall — January 7, 2011—The U.K. government recently published proposals on a series of “once in a generation” energy market reforms to safeguard and diversify the nation’s energy supply for the future. It aims to trigger a wave of new investment to replace the U.K.’s existing aging coal and nuclear power plants; build more renewable projects such as wind and solar; increase CCS plans to allow the U.K. to continue to use coal and gas; and allow the U.K. to meet its 2050 emissions targets.
U.K. Energy Secretary Chris Huhne announced four reforms that would create “a level playing field for low carbon technologies in the U.K.’s electricity market.”
- A Carbon Floor Price will increase investment in low-carbon generation by providing a clearer long term price for carbon in the power sector.
- Through a proposed “contract for difference” Feed In Tariff, the government will agree to clear, long term contracts, resulting in a top-up payment to low-carbon generators if wholesale prices are low, but clawing back money for consumers if prices become higher than the cost of low-carbon generation.
- A Capacity Mechanism will ensure there remains an adequate safety cushion of capacity as the amount of intermittent and inflexible low carbon generation increases.
- An Emissions Performance Standard will reinforce the existing requirement that no new coal is built without carbon capture and storage.
- Through a proposed “contract for difference” Feed In Tariff, the government will agree to clear, long term contracts, resulting in a top-up payment to low-carbon generators if wholesale prices are low, but clawing back money for consumers if prices become higher than the cost of low-carbon generation.
The Department for Energy and Climate Change says the four proposed reforms build on the recommendations of the Committee on Climate Change, they make good on specific commitments in the coalition’s program for government, including that there will be no subsidy for new nuclear, and they live up to the prime minister’s promise that this would be the greenest government ever.
