Chris Huhne today laid out the “biggest change since privatisation” to the electricity market. The Energy Secretary announced the publication of the Electricity Market Reform (EMR) White Paper at Westminster this afternoon.
The EMR is the Coalition’s plan to steer the UK towards low carbon energy. Over the next decade a quarter of the UK’s coal and nuclear power stations are shutting down and Mr Huhne said that more than £110bn in investment was needed to build the equivalent of 20 large power stations and upgrade the grid.
Mr Huhne told the Commons the reform was good for consumers as prices would be “lower and less volatile by 2030 than if we left the market alone.”
Central to the EMR are four measures that have been part of the proposals since first sketched out in December.
The Carbon Price Floor remained as an incentive to invest in low carbon generation by putting a bottom price on carbon.
Mr Huhne reinforced the push towards low carbon electricity via a system of long-term contracts like the Feed in Tariff and Contracts for Difference that are designed to tempt people to produce their own energy.
Full details of a third strand of EMR, the capacity mechanism, remained unclear, with the Secretary adding that the new framework for how we back up intermittent forms of energy like wind was yet to be decided. This could either be “centrally procuring” – only tapped into when needed – or it could be market-wide with any provider creating steady energy supply eligible for reward.
Shadow Energy Secretary Meg Hillier called her Cabinet counterpart to task for including the Emissions Performance Standard (EPS), which retained its role within the EMR despite being “unpopular”.
She said: “The industry is already puzzled by what it will achieve. If we’re going to have an Emissions Performance Standard, the Energy Secretary needs to explain why it is any more than green window dressing.”
Ms Hillier also suggested that clear direction for Carbon Capture and Storage was needed to give the EPS any backbone.