The Government is set to invest £110 billion in revamping the UK’s electricity generation infrastructure, according to a new White Paper from the Department of Energy and Climate Change (DECC).
At present renewables account for just 3% of the UK’s energy generation portfolio, but the White Paper on Electricity Market Reform (EMR) outlines a plan to raise this number to 30% by 2030. The wholesale reforms will look to protect the country from fluctuating oil prices by replacing nearly one-quarter of the country’s outdated power generation portfolio with new solar, wind, nuclear, gas and coal power stations. EMR will also help the UK meet its legally-binding carbon targets.
“The idea that somehow we’ve been massively investing in renewables is absolute nonsense,” Energy Secretary Chris Huhne said on Tuesday. “We are catching up from a very low base. We’ve had 25 years of dithering on energy investment. We’ve got to stop dithering, because decision time is coming. You can have investment or you can have blackouts.”
The reform is the most significant change to Britain’s electricity sector since privatisation in 1990 and it is based around four core premises: a carbon floor price to act as a backstop to the EU’s cap and trade scheme; a feed-in tariff for large renewable projects to replace the existing Renewables Obligation; an emissions performance standard; and a capacity mechanism that will incentivise energy companies to build and own gas plants that will act as backups for times when variable power sources are not producing. EMR is expected to be passed into law in 2013.
A key facet of the overhaul will be contracts guaranteeing long-term stable prices for electricity from low-carbon sources, in order to provide investors with a degree of certainty over their returns. However, the changes may also prove controversial, with fears already mounting over the existence of clandestine subsidies and the additional costs to consumer energy bills.
Nevertheless, the DECC insists that a failure to reform the market would end up costing consumers in the long run. According to DECC, failing to alter the status quo would see annual household electricity bills increase by £200 by 2030.
While EMR appears to signal the coalition government finally coming good on its pledge to become the “greenest Government ever”, the role of solar in this revolution remains unclear. Nuclear and wind appear to be the main beneficiaries – offshore capacity is being raised from 13GW to 18GW by 2020 – and with a number of questions around the legislation remaining unanswered, such as where the funds are coming from, it must be hoped that solar will not be the victim of another budgetary shortfall.