Power Generation

UK government presses ahead with electricity market reform

The UK government yesterday published an update to its White Paper from the summer, which would place National Grid at the centre of its planned electricity market reforms.

The Technical update sets out how the government will legislate for a new capacity mechanism, which will ensure a secure and reliable electricity supply while keeping costs for consumers down.

The Capacity Market aims to provide incentives for energy generators to invest in new capacity to ensure that there is backup electricity available at times of high demand – particularly important if the UK is to be more reliant on intermittent renewable supplies from wind and solar.

Under the proposals, energy generators would be able to bid to provide capacity for a given year through an auction process.

Generators would either have to deliver power or reduce consumption of large users when demand required – or face penalties.

The process, says the government, would be best delivered by National Grid.

“The UK faces a huge energy investment challenge over the coming years, with a fifth of our generating capacity coming to the end of its working life and electricity demand set to double,” Energy and Climate Change Secretary Chris Huhne said in his statement to Parliament. “We want to give certainty to investors to develop the mix of clean energy sources that will power the UK in the years to come.”

Huhne adds that the publication of the White Paper update marks a “milestone” in the government’s plans to reform the market.

The legislation will be introduced in the second session of Parliament, which starts in May next year, and should be on the statute book by spring 2013. This schedule means that the first low-carbon projects could be supported from 2014 onwards.

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Related stories:
UK environmental policies are not the cause of rising energy bills, says CCC (15-Dec)
UK Chancellor’s autumn statement shows no sign of green shoots (30-Nov)
UK government calls for comments on environmental legislation (28-Nov)
UK parliamentary committee voices concern over delay to electricity market reform (21-Oct)

16 December 2011