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Back You are here: Home Politics U.K. introduces new Energy Bill that will provide $12 billion for low-carbon


U.K. introduces new Energy Bill that will provide $12 billion for low-carbon

U.K. introduces new Energy Bill that will provide $12 billion for low-carbon
View over river Thames from Southern riverbank to Westminster Bridge, Houses of Parliament and Big Ben.

The British government has released an Energy Bill that it hopes will power low-carbon economic growth.

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The government said the bill will reform the design of the electricity market to kick-start the construction of low-carbon energy infrastructure and low-carbon manufacturing supply chains.

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Britain’s energy sector needs to attract around £110 billion in investment if it is to replace current generating capacity and upgrade the grid by 2020. The diversifying the energy mix should increase the amount of energy coming from renewables from the current 11 percent to up to 30 percent by 2020.

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“The Energy Bill will attract investment to bring about a once-in-a-generation transformation of our electricity market, moving from predominantly a fossil-fuel to a diverse low-carbon generation mix,” said energy and climate change secretary Edward Davey.

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The Energy Bill has increased the amount of support made available for low-carbon renewable energy projects from the 2.35 billion pounds ($3.76 billion) it is today to 7.6 billion pounds ($12.16 billion).

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According to Mr. Davey, by supporting the construction of a diverse mix of renewables as well as nuclear, gas and carbon capture and storage projects, the bill will protect the economy from energy shortfalls and decarbonizes the electricity supply.

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“In an era of rising global energy prices, by shifting to more homegrown sources of power and by becoming more energy efficient, we can cushion our economy and households from the fluctuations of world gas markets,” said Mr. Davey.

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In lieu of existing renewables obligations – which close in 2017 – new feed-in tariffs with contracts for difference will become the main support mechanisms for low-carbon investments.

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Under the contracts for difference, electricity generators will sign a power purchase agreement with an energy supplier and the National Grid. This will offer developers a guaranteed fixed income over the course of their contract, minimizing risk. CFD’s will be made available for renewables in mid-2013.

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The government will also take powers to set a decarbonization range for the power sector for 2030, a decision to exercise this power will be taken once the Climate Change Committee has provided advice in 2016 on the fifth Carbon Budget.

The government has also agreed to exempt some energy intensive industries from additional energy costs. And industries exemption will be subject to State Aid clearance from the European Commission.

Subject to Parliament, the Energy Bill is expected to achieve Royal Assent in 2013. All provisions in the Bill extend to England and Wales and the Majority will also extent to Scotland and Northern Ireland.

It’s estimated that the reforms will lower average household electricity bills by around 5 to 9 percent in the period 2016 and 2030. – K.R. Jalbuena

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