Changes set out to guarantee long-term energy security and tackle legacy of underinvestment

Published:  02 March, 2016

A series of changes to guarantee the long-term energy security of the UK were announced by government on 1 March, which aim to deliver an energy infrastructure ‘fit for the 21st century’.

A package of reforms to the Capacity Market has been unveiled, following a detailed review, to improve the system used to secure reliable sources of electricity capacity, tackle decades of underinvestment and safeguard the future security of our energy supply for generations to come.

The reforms set out plans to buy more electricity capacity and buy it earlier – encouraging more investment in our energy system. This will mean new energy infrastructure can be built, in particular new gas fired power stations, safeguarding our energy supply so we can better protect families and businesses from avoidable spikes in energy costs.

In the shorter term, the start of the Capacity Market will be brought forward one year to help give both consumers and the energy industry greater peace of mind for the coming winters. Tougher action will also be taken on companies, which go back on their Capacity Market contracts, locking industry in to the deals they commit to.

Energy & Climate Change Secretary Amber Rudd said: “Ensuring that our families and businesses have secure energy supplies they can rely on now and in the future is not negotiable and I’ll take no risks with this.

“The Capacity Market has driven down costs and secured energy at the lowest possible price for bill-payers, but I’m taking further action to tackle the legacy of under-investment and ensure our country’s long-term energy security. By buying more capacity earlier we will protect consumers and businesses from avoidable spikes in energy costs.

“We’re also sending a clear signal to investors that will encourage the secure and clean energy sources we need to come forward – such as gas and interconnectors – as part of our long-term plan to build a system of energy infrastructure fit for the 21st century”.

The consultation that will look at bringing forward the Capacity Market by one year suggests an early Capacity Auction would take place in January 2017 for delivery in winter 2017/18. The consultation also includes details on tougher penalties for companies that fail to deliver their Capacity Market contracts. This consultation will close on 1 April 2016.

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