SSE and EDF at odds over renewables target

Two of Britain’s energy suppliers are wildly at odds over setting a target for renewable energy in Europe. While officials at EDF Energy seem convinced an EU quota for renewables […]

By Vicky Ellis

Two of Britain’s energy suppliers are wildly at odds over setting a target for renewable energy in Europe.

While officials at EDF Energy seem convinced an EU quota for renewables would mean never-ending subsidies for green energy, SSE believes it would mean the complete opposite.

The two clashed in opinion at an evidence session today in the House of Lords, where peers quizzed the suppliers’ representatives on whether bills will go up because of EU energy policy and if a renewables target would be useful.

The European Union currently has binding 2020 targets for renewable energy and cutting carbon emissions and could set similar benchmarks for 2030.

The Head of Upstream Energy Policy and Regulation for French suppler EDF, which is planning to build a fleet of nuclear plants in the UK and is set to benefit from low carbon energy support, suggested the existing 2020 target was “misguided”.

Ravi Baga told the Committee: “Subsidiary targets such as the renewable energy target we think is misguided, it’s significantly undermined the carbon market itself and it’s difficult to see what you’ve tried to achieve, over and above the raw decarbonisation target.”

Next time around, he added, “We would not support any sub-targets once the overall decarbonisation target is set for Europe.”

He suggested the “fewer targets the better” for renewable energy, claiming these could lead to “permanent subsidy and unnecessary cost to consumers”.

However this was contradicted by Dr Keith MacLean (pictured) of SSE, which has a large stable of renewable energy projects and is planning still more.

The Scottish supplier’s Policy and Research Director retorted: “If I could just clarify, when I’m talking about targets I’m not talking about subsidy.

“I believe by giving clarity to the market and supply chain to invest, that’s how you get costs down… So almost the exact opposite of that, I would argue having clear targets for that would require less subsidy. Hopefully for a number of technologies by the time you get to post-2020 you end up with no subsidy.”

In a veiled dig at EDF’s nuclear plants which are likely to rely heavily on Government cash to be built, via the Contracts for Difference market mechanism to encourage low carbon energy, Dr MacLean added: “Companies like mine far prefer to live in a world with no subsidy when the market is operating, rather than one that is dependent on the political and regulatory regimes which have proved so volatile over recent years.”

On other matters there was more common ground, as both seemed to agree with fellow Committee panellist Rupert Steele of ScottishPower, that the UK was “sensible” to plump for a capacity payment in upcoming energy market reforms.

These payments will compensate suppliers for back-up generation such as gas, for the UK to fall back in times of high power demand when wind and solar energy can’t cope on their own.