Energy Bill met with lukewarm response

Industry leaders have cautiously welcomed the publication of details of future energy policy in the draft energy bill.

The legislation, which introduces a number of measures intended to make renewable energy generation more cost competitive, has provoked a mix of reactions ranging from Rolf Stein, Plasma Power, congratulating the government for tackling investor uncertainty to lawyer Matt Bonass accusing the bill of ‘muddying the waters’.

Alistair Smith, chairman of the power division of the Institute of Mechanical Engineers, said: “The Energy Bill is not just welcome but essential if the UK is to maintain a secure energy supply, while at the same time cutting carbon emissions at an affordable cost to the consumer. Although this Bill effectively kills off the idea of a truly open UK electricity market, this legislation is necessary in order to encourage companies to build a balanced electricity generating mix, with the correct proportion of baseload nuclear power along with the right balance of intermittent forms of renewable energy such as offshore wind power backed-up by reliable gas-fired generation.”

Corin Taylor, senior economic advisor at the Institute of Directors: “Businesses need clean, secure and affordable energy, but we’re concerned that the draft Energy Bill may fail to deliver. 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.”

Rolf Stein, ceo of Advanced Plasma Power: “In today’s draft bill the Government has sought to tackle head-on one of the key challenges facing the low-carbon energy sector – a lack of clarity and stability in terms of future energy prices.  Uncertainty over the return on investment in clean energy technologies has long acted as a barrier to urgently-needed investment from the private sector, and it is encouraging to see the Government acting to address this. 

If properly directed these financial incentives could put low-carbon solutions, many of which are home grown, right at the heart of the British economy.”

Robert Samson, of the Institution of Engineering & Technology: “We are surprised that no reference is made to demand in the announcement made today.  Support for low carbon generation will inevitably result in higher prices for consumers, but these price increases can be offset by improvements in energy efficiency, thereby reducing energy consumption, which is also better for the environment.  In addition demand has a crucial role to play in reducing the amount of capacity required.  The reforms to the electricity market must recognise this role and ensure incentives are available to reward customers accordingly.”

Matt Bonass, climate change lawyer in Bird & Bird’s Energy and Utilities team: “The publication of the draft Energy Bill today is, of course, to be welcomed.  However, its impact on investment and project development remains a concern as it is presented for pre-legislative scrutiny only at this stage. While this gives more time for debate on the details, it will do little to provide investors with the certainty they are looking for.

We have seen from other UK renewable energy policies, such as small scale Feed-in-Tariffs and the Renewable Heat Incentive, that there can be a long lead time between initial enactment of primary legislation and the introduction of secondary legislation, so uncertainty is likely to continue for some time yet.

Gaynor Hartnell, chief executive of the Renewable Energy Association: “Electricity bills are forecast to keep going up because of increasing gas prices. Ed Davey has acknowledged that shale gas isn’t going to make much impact on the UK. The EMR should limit price increases and not be the cause of higher electricity bills for consumers.

“Under existing arrangements, the Severn Barrage would not qualify for subsidy, and from 2013 onwards nor will landfill gas. Will these be treated on a par with nuclear? If not, why not?