UKDEA Media Release
UKDEA gives views on Electricity Market Reform Proposals
11th March 2011
The UK District Energy Association (UKDEA) has responded this week to DECC’s consultation on Electricity Market Reforms. The proposed reforms are intended to drive the growth of low-carbon energy industries through four key measures:
- Carbon Price Support, the Treasury’s proposals for which have already been scrutinised by the UKDEA which responded to the separate CPS consultation last month.
- Feed-in-Tariffs, providing long-term contracted revenues for low carbon generation.
- Capacity Payments, to encourage security of supply.
- An Emissions Performance Standard, limiting carbon emissions for coal power stations.
Whilst the proposals are aimed primarily at the large-scale generation sector, there are potential knock-on effects for district energy and decentralised scale energy industries. Most concerning of all is the lack of consideration given to these industries, which are of fundamental importance to delivery of the UK’s low-carbon economy.
As the UKDEA stated in its consultation response:
“The large scale generators alone cannot provide the level of decarbonisation required to meet the UK’s carbon emission saving targets. A comprehensive review of the energy industry is now required to genuinely incentivise low carbon energy systems at all scales. Proposals must therefore be absolutely clear that where they are intended to incentivise one area of the industry, consideration has been given to unintended effects on other areas of the industry. Currently, the proposals for large scale generation seem almost entirely divorced from treatment of the decentralised energy industry, both in terms of intended consequences and knock-on effects.”
The UKDEA also took the opportunity in this consultation to re-iterate the industry’s concerns surrounding the Carbon Price Support proposals. These concerns, already comprehensively set out in the UKDEA’s response to the Treasury’s own consultation process, included an explanation of the following negative outcomes if gas-fired CHP is not granted a fair exemption from CPS, taking into account the technology’s high efficiency and use of primary fuel to produce heat as well as power:
- Reduced funding and implementation of new CHP based low-carbon district energy schemes, with a direct negative impact on the carbon savings achievable by the UK’s decentralised energy industry;
- Severely limited reach for future forms of low-carbon decentralised energy plant; for example, without the financing and installation of gas-fired CHP schemes, there will be no progression to biomass-fired CHP schemes, as this important technology becomes more financially viable.
- Substantial increases in fuel poverty; district heating schemes often supply significant numbers of consumers in fuel poor areas and additional costs for CHP would therefore disproportionately affect those in fuel poverty.
Chairman of the UKDEA, Simon Woodward, said:
“The UKDEA applauds the Government’s objectives of an electricity system which delivers secure, affordable and low-carbon energy supplies. As Chris Huhne recognised in his speech to the UK Energy Summit, last summer, business requires “clarity, certainty and stability” to invest in low-carbon energy. Unfortunately, the current EMR proposals fall short of that vision, failing to incentivise all scales of UK industry and disregarding the substantial benefits available from district energy, community scale action and demand side measures.”
The UKDEA will follow developments with the EMR and associated CPS proposals, very closely. If the Coalition’s aim to be the “greenest government ever” is to be genuinely and sustainably realised, great care must be taken to ensure that new policies consider all scales of the UK’s low carbon industries and not just the large-scale generators and suppliers.
Notes to Editors:
The partners, owners and operators of the largest district energy schemes in the UK have aligned themselves in the creation of the UK District Energy Association (UKDEA); with the aim of not only promoting district energy as a means to deliver significant carbon savings, but also to establish a direct link between the Government and the industry's small market base.
The Association is a not for profit association of companies and public sector organisations involved or interested with these major schemes. Still in its infancy, the UKDEA has attracted leading players in the industry, with the UKDEA's Full members comprising of seven major organisations:
Birmingham City Council
Cofely District Energy Limited
Shetland Heat, Energy and Power Limited
Southampton City Council
Veolia Environmental Services Limited
Together these seven organisations represent the: Birmingham, Milton Keynes, Nottingham, Sheffield, Shetland, Southampton and Woking District Energy schemes.
Through Full and Associate membership, the UK District Energy Association’s aim is to represent current and potential owners, developers, consumers, partners, operators and product suppliers of District Energy schemes throughout the UK.
For more information contact:
Chris Tanner, Secretary of the UKDEA
Thames Head Wharf, Tetbury Road, Cirencester, Gloucestershire, GL7 6NZ
Tel: 01285 770615
Mobile: 07773 457941