A group of energy companies has written to Energy Secretary Ed Davey warning him that the Government’s proposed Energy Bill is “flawed.” The consortium, led by SSE, is “concerned” about proposals expected in the forthcoming draft Bill set to change the support framework for low carbon technologies to ‘Contracts for Difference’ (CfD).
DECC’s White Paper of last year proposed the introduction of new long-term contracts (Feed-in Tariff with Contracts for Difference), which the Government believes will provide stable financial incentives to invest in low-carbon electricity generation.
However, the group says the Government needs to ensure it has “workable solutions for renewables” and incorporate a “viable Plan B” if the CfD does not work. The group maintains that the current mechanism is too complex and costly and would introduce new risks and uncertainty. Consumers, the group suggests, would end up paying for these risks.
The group is also concerned over the legality of the CfD because of its support for nuclear, a mature technology. This might result in the plans being blocked or delayed by the European Commission under State Aid rules and could add even more uncertainty, deterring investors and affecting supply chains and jobs in the UK, the group suggests.
Joined by SSE are RES, Good Energy, Ecotricity, Fred.Olsen Renewables and Natural Power.