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Queen's Speech 2012: Energy Market Overhaul To 'Bridge Energy Gap'

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QUEENS SPEECH
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An overhaul of the electricity market set out in the Queen's Speech aims to drive massive investment in low carbon power and bridge the looming energy gap.

Keeping the lights on as old coal and nuclear power plants are shut down in the next decade will require pouring £110 billion into energy supplies and the grid - more than double the current rate of investment - the Government has warned.

And the UK has legally-binding targets to meet on cutting greenhouse gas emissions and boosting renewables.

The Energy Bill will reform the electricity market to introduce long-term contracts that pay a steady rate of return for energy over the lifetime of new low-carbon generators.

The reforms aim to overcome the high capital cost of building nuclear power plants or offshore wind.

The Government also claims the move will reduce expected rises in energy bills by around £40 by 2030, so that the average bill will increase by £160 instead of the £200 rise predicted if the market were left as it is.

But MPs have suggested the system will work for nuclear but not for low carbon power such as offshore wind, and warned the plans amount to a subsidy for new nuclear reactors, something the Government has pledged not to provide.

And despite the planned reforms, efforts to create a nuclear renaissance have stalled, with E.ON and RWE npower pulling out of a venture in March to develop new power plants at Wylfa in North Wales and Oldbury-on-Severn, Gloucestershire.

The Energy Bill will also introduce an emissions performance standard to prevent construction of new coal plants which produce too much carbon dioxide.

Jim Footner, head of Greenpeace's climate and energy campaign, said: "People normally dread energy bills, which have been soaring due to rocketing gas prices. But the Energy Bill announced today by the Queen could actually save people money.

"It can do this by taking the side of the bill-payer, and not the side of energy companies like Centrica, who want us to fork out for expensive gas imports and nuclear energy.

"Our household budgets just can't afford a new dash for imported gas nor for nuclear reactors which are going to cost at least £7 billion each." He added that the Energy Bill must back renewable power and energy efficiency.

Friends of the Earth's executive director Andy Atkins said: "The Prime Minister must resist pressure from fringe elements within his party to 'lurch to the right' on energy - 85% of the public back moves to invest in clean British energy from the sun, sea and wind.

"The Prime Minister must honour his pledge to lead 'the greenest Government ever' and seize this once-in-a-generation opportunity to make our power system cleaner, more affordable and less reliant on increasingly imported fossil fuels."

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