The Government has estimated that the UK needs to spend £110bn on new electricity supplies, if it’s to keep the lights on.
In a White Paper published yesterday (Tuesday), a key proposal outlined is the introduction of contracts which guarantee long-term stable prices for electricity from low-carbon sources. These include offshore wind farms and nuclear power stations.
The Energy Secretary Chris Huhne stressed that with aging power stations closing down, urgent market reforms are needed. According to Mr Huhne, as it stands the current electricity market is unable to meet the demand, and without action, risks of costly blackouts will be higher at the end of the decade.
“The scale of investment needed in our electricity system in order to keep the lights on is more than twice the rate of the last decade,” said Mr Huhne.
“This package will keep the lights on and bills down; it will insure us against shocks from volatile parts of the world like Libya, and end the dithering about our need for new plants,” he added.
The Government’s published proposals to reform the electricity market, which paves the way for legislation, sets out the needs for a capital investment of £110bn in energy generation over the next 10 years.
The Electricity Market Reform White Paper sets out key measures to attract investment and create a secure mix of electricity sources including gas, new nuclear, renewables and carbon capture and storage. The government also hopes to minimise the inevitable fuel price rises required to pay for all this.
The White Paper also proposes a number of tools to encourage private sector investment. Changes announced include the introduction of long-term contracts to reduce uncertainty for investors in renewable energy, placing a limit on the emissions from fossil fuel energy plants and a new contracting framework for electricity.
The Department of Energy and Climate Change (DECC) says that leaving the market as it is would see household electricity bills increase by £200 by 2030, but reforms will end up costing £160 per household a year by that time.
