Billions of Investment into UK with New Energy Act
By Anne Lewis-Schneider
The Energy Bill has received Royal Assent which could attract substantial private sector investment in the UK that is expected to be in the region of £110 billion with the new Electricity Market Reform (EMR). The plan for EMR delivery was made known by the Department for Energy and Climate Change (DECC) and aims to attract billions of private investment pounds between now and 2020. The investment capital will be used to upgrade the existing grid and also replace obsolete power plants with a better low carbon diversification.
EMR has brought in two changes, namely the Contracts for Difference, which will run concurrently with the existing Renewables Obligation and will in effect guarantee that clean energy producers will get a minimum price for their electricity over a long term contract which will come into being in 2014. The capacity market is the second change that will protect consumers against energy supply shortages, which will be achieved through giving the energy producers constant revenue. In return those producers must agree to provide the electricity when it is needed or they will be fined for failing to do so.
The two changes will be bolstered by support from a number of sectors, namely carbon floor prices, incentivising electricity reduction, emissions performance and an easing of the crossover from Renewables Obligation to the new Contracts for Difference. The DECC will be releasing an EMR delivery plan every five years.
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