Ed Davey MP writes… Keeping the lights on with greener energy

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.

* Edward Davey is Secretary of State for Energy and Climate Change, and MP for Kingston and Surbiton

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6 Comments

  • Simon McGrath 27th Jun '13 - 1:45pm

    Given that renewables are much more expensive than non renewables can you clarify what “it will be £5 billion cheaper for consumers than the current system of support.”means ?

  • jenny barnes 27th Jun '13 - 4:57pm

    Onshore wind is about 20% dearer than unmitigated gas or coal; about 20% cheaper with a CO2 tax of around 50£/tonne; about the same as nuclear. CCS (dream on :)) gas and coal is about 50% dearer than onshore wind. Offshore wind is 50% dearer than onshore. Solar is dearer yet.
    BUT… fossil fuel usage will peak soon, and then the costs will rocket.
    Oh – did I hear you say 300 years supply of gas? Remember that the demand for energy doubles every 50 years. So you would actually use the first 100 of that 300 years in 50 years, and the remainder in the second 50 years, assuming you didn’t use it to subsitute for other energy sources in which case it would go even quicker. Still, as someone once said, in the long run we’ll all be dead. I expect for some MPs, 2016 looks like the long run.

  • “we need to attract £110 billion of private sector investment …”

    Umm, If this really is a good investment then it’s perfectly okay for the public sector to do it. In setting ‘strike prices’ the public sector has already taken on a big chunk of the risk leaving private investors to take the cream.

    Of course, it may be that you believe the UK public sector is simply too incompetent to do this (not entirely an unreasonable view) but then the question is why would you suppose it’s any more competent to manage the procurement process since it’s apparent that governmental fingerprints are everywhere. Power without responsibility never works. However you parse it we must have a competent public administration or we are f….d.

  • A Social Liberal 27th Jun '13 - 10:30pm

    Is the gas from fracking a form of green energy? Because I could have sworn I saw Mr Davey defending the right to frack our way to a better energy future – despite the price the US countryside is paying at the moment.

  • David Evans 28th Jun '13 - 9:04pm

    It’s interesting that this was posted one day before Ofgem reported that there is an increased likelihood of a power supply disruption due to insufficient capacity as soon as 2015. Apparently they estimate a 1 in 12 chance or lower of a loss of power in the year due to insufficient capacity. Now if that was Winter 2014, we would be electorally stuffed, and to be honest, deservedly so.

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