Today is a very important day to the UK energy market, probably the most important since it privatised 20 years ago. The Energy Market Reform White Paper is due to be published and will determine the future of the industry for the next 20 years.
The UK Energy Market Reform white paper is expected to provide fresh details on how the government plans to stimulate investments to the renewable energy sector to help the UK meet the 15% target of electricity generated from renewable sources by 2020. How it plans to reduce the Big Six monopoly and the details of the emissions performance standard to block plans for new unabated coal-fired power plants.
It is estimated that the UK needs £200 billion of investments by 2020 to meet its climate commitment goals and the government plans to spark off investments by stipulating a set price for low carbon electricity which includes nuclear that will then be passed on to household and business energy prices.
According to market analysts this is a very sensitive announcement, especially after British Gas price hikes – gas up 18% and electricity up 16% – announced last Friday which we commented on here in last week’s article.
The energy secretary insists that the reforms will help increase energy and price security and a long term reduction in bills. Speaking to the BBC Mr. Hune said:
“Once you take the effect on bills you actually find that we’re getting overall bill down in the long-run,”
One of the most important points to be dealt with is the reduction of the Big Six monopoly and the white paper should at least reduce their stranglehold. Right now these utilities companies supply 97% of the energy consumed in households and reforms must prevent them from lock themselves in for the next 20 years as the only ones able to play in this market.
The government must require complete transparency around the way Big Six generate and sell energy to buffer households and businesses from price hikes. It also has to provide more encouragement to small energy supply companies guaranteeing they actually have someone to buy energy from.
Demand management is another topic that will be dealt with on the UK Energy Market Reform as experts suggest it is too early to for the government to come up with a new capacity mechanism as the increase of smart meter usage, development of interconnectors and storage systems might eradicate the need for “peak demand”.
Last but not least important is the establishment of the emissions performance standard that will limit coal power plant’s CO2 emissions to 450 grams of carbon dioxide (CO2) per kilowatt hour of power production. The idea is to stop all coal power plants from generating energy within the next three years.
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