Government encourages investment in renewable technologies

Chris Huhne

The Department of Energy and Climate Change and HM Treasury have together launched consultations on fundamental reforms to the electricity market to ensure the UK can meet its climate goals and have a secure, affordable supply of electricity in the long term.

The Government needs to meet a legally binding target of 15 per cent of total energy coming from renewable sources by 2020.

The Feed-In Tariff (FIT) scheme was set up by the Government to help achieve this. As part of the scheme people using renewable electricity technology, such as solar panels, receive payments for the renewable electricity they generate and for any surplus electricity they are able to export back to the grid.

This scheme along with the Renewable Heat Incentive is being used by the Government to meet this target, but the reform aims to take further steps.

Energy and Climate Change Secretary Chris Huhne said: “More than £110 billion of investment is needed in new power stations and grid upgrades over the next decade, that’s double the rate of the last 10 years. Put simply, the current market is not fit to deliver this.

“The UK was first to put binding carbon reduction targets into law. Now the coalition is taking the historic step of introducing, permanently, a level playing field for low carbon technologies in the UK’s electricity market.

“Without investment in renewables, new nuclear and carbon capture and storage, emissions will remain too high, we will become dependent on energy imports, and increasingly vulnerable to fossil fuel price volatility.

“Low carbon technologies must be given the chance to become the dominant component in our electricity mix.

“In the new, reformed UK electricity market, the economics of low carbon will stack up like nowhere else in the world. By 2030, three quarters of our electricity could be low carbon.

“Crucially, our reforms will also make sure there is enough spare supply to keep the lights on reliably. They will protect the rules for existing investments. And, over the long term, they will achieve more, while resulting in bills lower than they would otherwise be.”

Economic Secretary to the Treasury Justine Greening said: “This is the first step towards getting the investment we need in low carbon technology and more energy efficient homes and businesses. Responses to this consultation will help ensure that these measures are well-designed and cost-effective.”

Government targets include:

  • About 30 per cent of our electricity must come from renewables by 2020, to meet our contribution to Europe’s target on renewable energy.
  • The power sector needs to lead the decarbonisation of our economy. It must be largely decarbonised during the 2030s to keep us on track for meeting our climate change goals.

It is anticipated that reforms will be in place by 2013.

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