POWER firms have warned energy secretary Ed Davey that he must move quickly to thrash out the details of the Energy Bill if he is to stoke investors’ confidence in the sector and bring in the £330 billion that needs to be spent in the next 20 years.
Davey yesterday unveiled what he heralded as a “once-in-a-generation transformation” of Britain’s power industry in an attempt to stimulate the building of power stations, the upgrading of transmission lines and improvements to the energy efficiency of homes and businesses.
Under Davey’s measures, consumers will have to pay around £75 more a year by 2020 to fund technologies such as wind farms, nuclear power stations and carbon capture and storage, although energy-intensive industries could be spared much of the extra costs.
Davey argued household bills would rise by up to 9 per cent between 2016 and 2030 if no action was taken and claimed the Energy Bill will save the UK between £1.3bn and £7.4bn over the same period.
Business groups – including the CBI and the Institute of Directors – welcomed the exemptions for heavy industries, although details of the deal are yet to be thrashed out.
Environmental campaigners and shadow energy secretary Caroline Flint blasted Davey for not introducing an emissions reduction target for 2030, arguing that investment will fall away if the current 2020 target is met.
Greenpeace said House of Commons energy committee chairman Tim Yeo is likely to introduce an amendment demanding a 2030 target.
The challenge facing Davey was highlighted yesterday by accountancy firm Ernst & Young’s influential quarterly renewable energy “country attractiveness index”, which showed the UK had fallen to sixth place behind France when it came to its ability to bring in investment.
Gaynor Hartnell, chief executive of the Renewable Energy Association, said companies needed to gain confidence in the new systems “as quickly as possible”.
She added: “The devil will be in the detail, which we have yet to fully examine. We can’t afford to be complacent. It is vital that confidence in the policy framework is established quickly given the investment hiatus we face. There is still much work to do, to translate the legislation into clear and effective policy.”
A report published earlier this month by the London School of Economics said £330bn needs to be invested in energy infrastructure before 2030 in order to hit the UK government’s emission reduction targets and replace ageing power stations.
Angela Knight, chief executive at Energy UK, the body that represents the “big six” power firms, said: “In its detail, the Bill must provide sufficient clarity and confidence for investors over the direction the UK is taking on energy policy.”
Keith Anderson, chief corporate officer at ScottishPower, said: “Legislation to bring forward a new incentive mechanism for investment in much-needed large-scale, low-carbon investment is now vital.”
Npower chief executive Volker Beckers added: “It’s now that the real work begins. It’s vital for our customers and British business alike that these reforms are implemented swiftly and effectively, and do not add unnecessary cost to future energy bills.”
Scottish Hydro-owner SSE noted: “The UK government published over a thousand pages of information, which shows how complicated the electricity market reforms have become.”