Research and development in the energy industry have been neglected in recent years in favour of the mass deployment of renewable technologies.
Energy Secretary Amber Rudd made the comment as part of her speech at the Institution of Civil Engineers in London today, setting out her “consumer-led, competition-focused” vision for the industry.
She said: “We do not think this is right. We cannot support every technology. Our intervention has to be limited to where we can really make a difference – where the technology has the potential to scale up and to compete in a global market without subsidy.”
The Conservative MP, who was appointed to the new post earlier this year, said she inherited a department “where policy costs on bills had spiralled”, which led to the government scrapping subsidies for onshore wind from next year and proposing to reduce support for solar and biomass.
Subsidies must be temporary
She believes subsidies should be temporary and not part of a permanent business model.
Ms Rudd added: “We need to get the right balance between supporting new technologies and being tough on subsidies to keep bills as low as possible. We can only expect bill payers to support low carbon power as long as the costs are controlled.
“Most importantly, new, clean technologies will only be sustainable at the scale we need if they are cheap enough. When costs come down, as they have in onshore wind and solar, so should support.”
The Energy Secretary said DECC’s funding for innovation is already supporting the development of energy storage, low carbon transport fuels, more efficient lighting and carbon capture and storage.
She also unveiled plans to close coal-fired power stations by 2025, replace them with gas power plants and “get nuclear off the ground”.
Consumer body Which? welcomed the news. Executive Director Richard Lloyd said: “Putting consumers and competition at the heart of energy policy is the only way to make this market work better for everyone. With energy prices the top financial concern for consumers, it’s right government delivers investment in new generation at the lowest possible cost.”
Paul Barwell, CEO of the Solar Trade Association however added it makes “little sense” to replace coal with gas.
He said: “Gas and large-scale solar will soon need very similar levels of support but unlike gas, solar has the bonus of zero carbon emissions, future price certainty and no dependency on imports from unstable countries.
“Solar has grown from providing 0% to the current 2% of UK electricity supply within just the last five years and could get to 5% by 2020 with very little extra support. There is plenty of room to include solar alongside gas and nuclear in the coal phase out.”
Energy UK added the industry will work with government “to continue to deliver reliable, affordable, clean energy” but insists it must provide long term policies to attract investors.
CEO Lawrence Slade said: “The planned phasing out of coal can be managed but only with unambiguous policy. Policy that brings forward the substantial investment in other generation sources. We are starting today from a point where around a quarter of all the UK’s demand for energy is met from coal fired power stations. Policy needs to be affordable for consumers while meeting our international climate targets.
“The energy sector will fully play its part but we need government to provide long term policies so investors find energy projects attractive. Britain also needs a mix of technologies. Renewables play an important role alongside gas and nuclear so we can meet the country’s ongoing future energy needs at the lowest cost and with the least environmental impact.”