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James Munro BSc MSc 5 th February 2013

EWEA 2013. Is the Electricity Market Reform Bill doing enough to encourage investment into the UK wind industry?. James Munro BSc MSc 5 th February 2013. Introduction. Objectives: What is the need behind the EMR? Main components of the EMR Bill Overview of the current status of the Bill

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James Munro BSc MSc 5 th February 2013

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  1. EWEA 2013 Is the Electricity Market Reform Bill doing enough to encourage investment into the UK wind industry? James Munro BSc MSc 5th February 2013

  2. Introduction • Objectives: • What is the need behind the EMR? • Main components of the EMR Bill • Overview of the current status of the Bill • Introduction to the study • Main issues with the EMR • Conclusions

  3. What is the need behind the EMR? • Drive for EMR • Renewable Obligation Certificates (ROCs) expire in 2017 • Minimising cost to the consumer • Fifth of UK electrical generation capacity is closing by 2020 • Increase investor certainty within the market • EMR Objectives • Encourage investment over the next decade. • Ensure Security of Supply • Decarbonise Electricity Generation

  4. EMR Operational Framework • Contracts for Difference • Contracts between Government owned counterparty and generator. • Payments based on difference between reference price and strike price. • Funded by supplier obligation • First Come First Served Basis • Wider Policy • Capacity Auctions • Carbon Price Floor • Emission Performance Standards • Electricity Demand Reduction

  5. Overview of the Current status of EMR • Current status of the EMR • Energy Bill introduced into parliament in November 2012 • Delivery Plan to be introduced in July 2013 • Royal assent by end of 2013 • First allocation of CfDs by mid 2014 • Desktop study • Investigate current views of EMR and whether it will encourage necessary investment • Interviews conducted with industry Stakeholders • Internet research

  6. Current Issues • Do you think EMR will encourage investment in wind energy? • Majority stated it will encourage investment • Undecided whether it will generate £110bn • Waiting for more information • What are the positives? • Increased certainty on future revenue • Gradfathering of the ROCs • Government listening to industry • More detail provided by Government in Draft Bill

  7. Current Issues • What are the negatives? • Delays, confusion and uncertainty • System is seen as ‘Too Complex’ • Seeing investment hiatus because of lack of clarity. • Allocation of the annual budget • Government has stated a £7.6bn annual spend by 2020 • Budget to cover RO projects, small scale FiT as well as CfDs • Subsidy for new nuclear? • Concern whether new subsidy will be at expense of renewables

  8. Current Issues • Strike prices • Unclear about mechanisms that will adjust strike prices • Increasing Grid Connection Charges • Likely to favour larger developers • Concern that smaller developers cannot compete • Restricted to site development • UK Politics Unsettling Market • Potential for UK to pull out of the EU • Non-uniform approach of the British Government

  9. Conclusions • Will the EMR provide sufficient investment? • Still a number of issues that need to be resolved • Ensuring certainty is key to its success • Developers are keen to see future plans • Lessons Learned • Industry prefers the increased certainty a CfD brings • Consultation and calls for evidence • Increase clarity as much as possible • Consensus that British government is listening to industry • Questions?

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