UK Energy Secretary Ed Davey has hit out at the “myths” surrounding the government’s flagship Energy Bill, which is due to go before Parliament this session.
The legislation is aimed at driving the some £110 billion of investment in the electricity infrastructure needed over the next decade to replace retiring power plants and keep the lights on, while decarbonising the country’s supply.
The new system will introduce feed-in tariffs (FITs) with contracts for difference (CfDs) as long-term contracts for low-carbon electricity supply, a new means of ensuring back-up power for peak demand, and an emissions performance standard for fossil fuel generators.
But critics have warned that the proposals are so complicated that they will put off potential investors.
Davey hit back at the accusation, saying the system of FITs with CfDs is trusted by financial institutions and that similar schemes are being used in Canada, the Netherlands and Denmark.
“I’ve spoken to global fund managers who’ve say that the uncertainty of the current arrangement put them off investing, but that CfDs give them the predictable revenue streams they need to invest in big projects,” he commented at a CBI event yesterday.
He also resisted suggestions that the Electricity Market Reform is a “stealth subsidy” for nuclear power.
“I am not ideologically wedded to any energy source,” he said. “I want a diverse, secure energy mix that allows us to decarbonise our economy at an affordable pace.”
Nuclear power will be part of the UK’s energy mix, he went on, “but it will be for private companies to construct, operate and decommission nuclear power stations”.
Davey reiterated the government line, which has oft been repeated, that “there will be no public subsidy for new nuclear power”.
He also hit out at accusations that the government is setting the stage for a ‘dash for gas’, saying that while there is a clear role for gas in the medium term, providing backup and baseload electricity, the UK cannot achieve its carbon reduction aims by simply switching to gas.
Davey warned that gas prices are likely to remain volatile and while unconventional sources like shale gas “can make a difference”, it may not be “as big a difference as some sections of the press would have me believe”.
“So yes – gas has a key role to play in meeting our energy security and climate goals. But this is in conjunction with renewables, nuclear and other low carbon sources, not instead of them,” he said.
He concluded that the Energy Bill will be “good for business, good the country, good for consumers, and good for the environment”.
“Our reforms are the best solution to the unique challenges we face – falling supply, growing demand, and carbon. We need an electricity market that can take advantage of all kinds of cheap clean energy sources, without tying ourselves to one in particular.”
For further information:
UK government scraps environmental regulations to save £400 million (8-Aug)
Six firms announce UK energy investments (7-Aug)
UK government unveils £100 million fund for green investment (6-Aug)
UK Energy Bill will deter investment and add costs, warns committee (23-Jul)
12 September 2012