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Questions on electricity market reform
20/06/2012
Energy Minster Fergus Ewing has today warned the UK government not to attempt to use Electricity Market Reform to provide public subsidies for nuclear power but instead to concentrate on renewable energy which is bringing jobs and investment to Scotland.
The draft UK Energy Bill, published last month, outlines plans for Electricity Market Reform.
But, giving evidence at the Scottish Parliament’s Enterprise, Energy and Tourism Committee, Mr Ewing said there were serious questions about the model of reform proposed.
Mr Ewing said that the Scottish Government supported the strengthening of market support for renewable electricity as well as carbon capture and storage, but warned that any reform must reflect Scotland’s devolved powers, deliver our low carbon energy potential and protect consumer interests.
Mr Ewing said the UK Government must recognise that the purpose of Energy Market Reform is to promote emerging energy sources, such as renewables, not use public money to support already mature technologies such as nuclear.
Mr Ewing warned that nuclear build programmes are complex and historically have proven to have significant cost over-runs and programme delays. And he said that despite the UK Government’s claims that they will not subsidise new nuclear, the Scottish Government has significant concerns about the energy mix the UK Government is pursuing given the broad definition of low carbon in the EMR proposals, and that renewables must not lose out from increased support from nuclear.
He warned the UK Government that the Scottish Government expects to be a partner in decision making about reform, not a consultee.
And he stressed the importance of certainty for the industry.
The draft Bill outlines plans to revise the way low-carbon electricity is supported to give low carbon energy generators certainty about the price they will receive for their electricity.
It also gives Scottish Ministers a statutory consultation role in the development of new arrangements for supporting low-carbon generation and over the setting of the strategic direction of Ofgem, the UK Energy Regulator.
Energy Minister Fergus Ewing said:
”There are very serious questions about the model of energy market reform the UK Government is proposing.
“This could be a real opportunity to support and encourage low carbon energy and we want to make it work, but we cannot be in favour of subsidies for nuclear energy.
“The role of Government is not to support already mature technologies such as nuclear energy, but to encourage nascent technologies such as renewables.
“Scotland has astounding green energy potential and vast natural resources, which are already delivering jobs and investment across Scotland, and we have a responsibility to make sure our nation seizes this opportunity to create tens of thousands of new jobs and secure billions of pounds of investment in our economy.
“Industry leaders have made clear that they need clarity and certainty on support from government in order to make investment decisions - the current market reform process provides neither.
“The Scottish Government supports the aims of strengthening market support for renewable electricity, and is working with UK Government in these reforms so they reflect Scotland’s powers and help realise our energy potential.
“It is essential the reforms send the right market signals for renewables and Carbon Capture and Storage technologies so that industry has clarity over the form of support it will receive. It is also essential these reforms build on the successes we have achieved in Scotland through effective use of our existing powers and an increasingly effective alignment of political, industry and investor effort.
“Scotland already leads the world in renewable energy. We should focus on that potential, and the UK Government must recognise that the purpose of this reform is to support renewable energy, not to provide subsidies for nuclear energy. Clean, green renewables must not lose out from increased support for nuclear.”
Related information
- Currently renewable energy in the UK is supported through the Renewable Obligation. The Energy Bill proposes that this is replaced with Contracts for Difference, which will provide long term revenue stability to investors through a guaranteed price for electricity, reducing investment risk and ultimately lowering costs to consumers.
- Read the response from the Scottish Government to the draft UK Energy Bill.