By Daniel Hunter
Keeping the lights on, consumers energy bills down and creating cleaner electricity to help tackle climate change, are the three goals of ambitious draft electricity market reform legislation published today (Tuesday).
The reforms are designed to provide investors with transparency, longevity and certainty in order to attract £110 billion of investment to bring forward new low-carbon power generation for the 21st Century.
Over the next decade, around a fifth of existing power generating capacity will come off-line.
Without these reforms, we could in the future see blackouts affecting millions of homes in some years. We would also be more dependent on importing oil and gas from overseas, this could present geopolitical risks and make our energy supply unsecure.
Demand for electricity will grow by 2050 as it is increasingly used to power our transport and domestic heating.
This leaves the UK with an energy gap which needs to be filled.
“Leaving the electricity market as it is would not be in the national interest. If we don’t secure investment in our energy infrastructure, we could see the lights going out, consumers hit by spiralling energy prices and dangerous climate change," Secretary of State Edward Davey said.
“These reforms will ensure we can keep the lights on, bills down and the air clean.
“The reforms will also be better for the economy, leaving us less vulnerable to rising global energy prices and supporting as many as 250,000 jobs in the energy sector.
“By reforming the market, we can ensure security of supply for the long-term, reduce the volatility of energy bills by reducing our reliance on imported gas and oil, and meet our climate change goals by largely decarbonising the power sector during the 2030s”.
However, Corin Taylor, Senior Economic Adviser at the Institute of Directors, has warned that the bill may fail to deliver.
"Businesses need clean, secure and affordable energy, but we're concerned that the draft Energy Bill may fail to deliver," he said.
"We need to see a technology-neutral approach adopted as soon as possible, so that the cheapest low-carbon energy sources are prioritised, but the Bill confirms that the Government will try to pick energy winners for at least another decade. We hope that the contracts for difference framework will succeed, but it looks like an overly-complex way of delivering much-needed investment in Britain's energy infrastructure."
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