Hopefully by the time you’ve read this you’ll be aware of the details I announced this morning to secure the future of energy supply for the UK – if not, and excuse the pun – let me enlighten you.
As you know already, we have a plan in the form of the Energy Bill that is progressing well through Parliament. The plan essentially addresses a major issue – we need to attract £110 billion of private sector investment to replace the supply we lose as a result of 20% of our power stations closing by the end of this decade. The ‘plan’ has now passed the Commons stages with overwhelming support – the Third Reading vote was 396 for versus 8 against.
What I announced earlier today is the detail that will allow us to turn this plan into a reality. We’ve published draft ‘strike prices’ for renewables which will guarantee a return for investors and give them the confidence they need to unlock much more funding for onshore and offshore wind, tidal, wave, biomass, and large solar projects.
This radical new approach is good news both for delivering the green agenda and for consumers. By 2020, we now expect renewables to exceed 30% of the electricity mix and it will be £5 billion cheaper for consumers than the current system of support.
Today I also confirmed that we will be running a Capacity Market – an energy auction – which will take place next year. It will ensure we bring on the investment we need by winter 2018 and also other measures Lib Dems have long argued for like demand reduction. With those who have the best bids in a capacity auction, a deal will be struck – in return for a fixed fee, participants will have to provide the energy we need, when we need it.
The package of reforms is also good news for the green economy, supporting up to 200,000 jobs in renewables by 2020. Let’s not forget we’re already delivering on green jobs having created 30,000 since 2010.
Should we need to introduce additional measures to tackle any mid-decade power shortage Ofgem will use a new supplementary balancing reserve and demand side response, under existing powers. These belt and braces measures for energy security could include temporally bringing mothballed plant back on stream, or encouraging businesses to reduce demand.
Together this package of measures will provide investors with the certainty they need to invest in green energy, will ensure the ‘lights stay on’ and deliver a good deal for consumers.
* Ed Davey was the MP for Kingston and Surbiton and Secretary of State for Energy and Climate Change.