The Renewable Energy Association (REA) has set out ten key asks to ensure Electricity Market Reform (EMR) can work for renewable power.
The REA supports the intention to re-orientate the electricity system towards low carbon investment, but the new arrangements do not yet work for renewable power.
The REA’s asks were sent to over 100 MPs yesterday (18th October), ahead of the introduction of the Energy Bill next month. The new Gas Strategy and the revised Renewables Roadmap are also expected alongside the publication of the bill.
Gaynor Hartnell, chief executive of the REA (pictured), said, “EMR fundamentally overhauls the support framework for low carbon power at a time when confidence is fragile. Given welcome but slow progress on renewable heat, and major difficulties for renewable transport, it is essential that government gets EMR right if it is to secure 30% of the UK’s electricity from renewables by 2020 and stand a chance of meeting our 2020 renewables targets.
“We greatly appreciate the efforts of the Energy Secretary in this regard and his desire to remove politics from this vital area of policy. However, he should be aware that some of the proposals his department is currently consulting on run counter to what he is trying to achieve.
“Additional capacity is desperately needed on the system, and relative to other low carbon options, renewables can be deployed quickly and cheaply. Government should listen very carefully to our asks, and we are pleased to hear from Ed Davey’s speech that we have already started to make progress on a couple of them.”
Most of the ten asks are identified as ‘high’ importance. They include a clear carbon target to 2030, a fair and transparent process for awarding contracts and a clear route to market for electricity sales.
The REA is concerned about the UK’s wholesale electricity market and fears generators will not be able to achieve the ‘reference price’ for their power, and therefore fall short of the strike price necessary to make their projects economic. The REA believes this could be overcome if one agency contracts directly with developers and auctions the power. The Non-Fossil Purchasing Agency has been in existence for over 20 years and performs a very similar function.
The REA is also urging government to recognise the major role of new actors in the renewable energy sector by increasing the size threshold of the fixed Feed-in-Tariff (FiT).
With major power projects taking around three years to develop, and the Renewables Obligation (RO) set to close in 2017, many investors are deeply wary of EMR, as the energy secretary acknowledged. The REA therefore believes it is essential to extend the RO to 2020, with EMR running in parallel, and is urging government to take powers to do this under the Energy Bill. It is unclear what powers the government will be taking from the energy secretary’s comments. While the REA is pleased to see the energy secretary acknowledge the dangers of an investment hiatus, REA members need a much longer term outlook than 15 months.
Ener-G director Andrew MacLellan, a member of the REA’s EMR working group, commented, “DECC must not think that publishing the Energy Bill will be sufficient to reassure investors and companies. Given the uncertainties and complexities around these proposals, confidence will only be established as EMR is proven to work in practice. It is essential that there is a good period of overlap between the RO and EMR if we are to avoid a long investment hiatus. This should be a high priority when we are facing a supply crunch and urgently need to secure good quality jobs.”
