Engineering news
Energy secretary Ed Davey has unveiled the Energy Bill, hailing it as the “once-in-a-generation transformation” of the UK's power sector.
The delayed Bill, published today, will see government treble investment in low-carbon power generation to £7.6 billion by 2020, up from £2.35 billion invested this year.
The Bill sets out plans for long-term contracts which will ensure companies are paid a guaranteed price for the electricity they generate from low-carbon sources. The move is aimed at overcoming the high capital costs of offshore wind and nuclear reactors.
Energy-intensive companies, such as steel and cement producers, will be exempt from the additional costs of the switch to renewable energy in order to encourage investment in low carbon power.
Other measures set out include a “capacity mechanism” - companies will be able to bid for support to provide power sources, or reduce demand, to ensure the lights stay on even during peak demand.
Davey described the reforms to the electricity market as an “economic opportunity”.
He said: “It will stimulate supply chains and support jobs in every part of the country, capitalising on our engineering prowess and our natural resources, cementing the UK's place at the forefront of clean energy development.”
Dr Tim Fox, head of energy and environment at the Institution of Mechanical Engineers, said: “The publication of this new Bill is good news for engineers, investors and the general public as it means we are a significant step closer to getting on with the job of building the major infrastructure projects needed to keep our homes warm, the lights on and industry working.
“With a looming energy gap for 2015, creating a stable regulatory framework for the energy sector is absolutely crucial for investor confidence and we look forward to the announcement next year on the details of the incentives, without further delays.”
The government has also published proposals to reduce energy demand, as according to the Department of Energy and Climate Change a 10% reduction in electricity use could save £4 billion by 2030, and reduce carbon emissions equivalent to those of a large city in just one year.
Financial incentives for firms and individuals that install more efficient equipment, such as better freezers in supermarkets, are among the proposals discussed.
Firms could also be paid to commit to permanent reductions in their electricity use, and an obligation on energy firms to help secure efficiencies extended to cover business premises.
However, the Bill's failure to include a target to slash emissions from the electricity sector by 2030 has led to criticism from environmental groups who say the measures do not go far enough to secure the investment in green technology needed in the next twenty years.
Concerns have also been raised that the trebling of funding for green power sources such as wind farms, which will be levied on fuel bills, will push up household energy costs.