Electricity Market Reform: Action needed to ensure sufficient generation gets built

If the UK is to keep to its environmental commitments then electricity market reform (EMR) needs to quickly facilitate investment in new large scale generation, whilst enabling transition to a low carbon energy system over the next ten years, say the Institution of Engineering and Technology (IET).

The warning from the IET comes as the Energy Bill, which will underpin the EMR, is expected to be covered in today’s Queen Speech.

The main objective recommended by the IET in its briefing* ‘UK Electricity Market Reform: The Engineering Perspective’, is that the social, economic and political costs of insufficient capacity, which could arise at peak demand times when wind and other variable generation is low, seem to be rather higher than the costs of slight over provision. It is therefore wise to err on the side of caution; too much capacity is better than too little. The impacts of not achieving this cannot be treated too seriously.

Simon Harrison of the IET said: “There needs to be a great deal of care taken in the final design of the Energy Bill. Given E.On and RWE’s planned disinvestment in Horizon there is even more need to judge nuclear support carefully so that the interests of consumers and nuclear project developers are properly balanced.    However there does need to be sufficient clarity soon to move gas and renewables build forward quickly.”