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Energy Bill

Posted on by Rebecca

The long awaiting Energy Bill was finally published on 29 November and as expected it received rather mixed reviews from industry stakeholders. The government press release believes it to be a ‘radical reform that will kick start a renaissance in construction of low-carbon energy infrastructure and low-carbon manufacturing supply chains’. However, many felt that the bill didn’t go far enough in supporting the green goals that the coalition apparently stood for.

In putting this bill together, the Government was facing a massive challenge. The reality is that investment in energy infrastructure has stuttered in recent years – possibly a result of the recession, possibly down to lack of strategic clarity – which consequently has made lights out a real possibility come 2015. Therefore, the Government needed a strategy that would work in the long term as well as ensuring that in the short term the lights would stay on.

A lot of focus has been given to the increase in household energy bills through a ‘surcharge’ to help fund greener technologies such as wind turbines and nuclear power. Meanwhile, others have warned that the figures quoted within DECC’s information are open to misinterpretation and the lack of a decarbonisation target still doesn’t provide confidence to investors.

Positively, the new contracts for difference (CfDs) should provide stable financial returns for low carbon energy projects, backed by a single counterparty and, critically, a substantial levy control framework that all but guarantees the UK will both meet its 2020 renewable energy targets and move forward with a new fleet of nuclear reactors.

Many believe that the Energy Bill placed far too much focus on gas generated energy capacity. In reality, this is probably where the government faced its toughest challenge in trying to balance environmental goals with secure, high baseload capacity that could be delivered quickly.

Ultimately, the next eight years should now be characterised by a historically significant £100bn plus round of investment in state-of-the-art renewable energy projects, nuclear plants, carbon capture and storage (CCS) demonstration sites, smart grid upgrades, and, of course, gas infrastructure.

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