The Government today published its draft Energy Bill, which is designed to encourage major investment in clean energy generation, and is expected to come into force in the Autumn.
Critics have expressed concerns that the measures will result in higher energy bills for consumers, but Energy Secretary Ed Davey has stressed that they do not amount to public subsidies for new nuclear plants.
He commented, "The Government needs to increase energy capacity to compensate for the closure of a number of coal and nuclear plants, and to reduce the UK's reliance on imported gas. We need to make sure the bias towards gas is dealt with and that low carbon sources can compete on a level playing field. With nuclear capacity and coal capacity coming offline, we need a market structure to keep the lights on. To get investment, we need to give investors certainty that will lower the cost of capital. There will be no blank cheque for nuclear - unless they are price competitive, nuclear projects will not go ahead."
State subsidies for nuclear plants are illegal in the European Union, and guaranteed contracts for energy suppliers can be interpreted as a way around these laws. Mr Davey conceded that energy bills could increase as a result of these contracts, but said bills would rise even more without them due to the rising cost of imported wholesale gas. He argues that producing our own energy would help to keep prices down.
Npower chief executive Volker Beckers has stated that the impact on domestic fuel bills was unclear, "It's too early to say the impact will be X% on bills." In turn, Environmental groups say the Bill will not reduce the UK's reliance on gas, and that more clarity is needed over the Government's long-term policy, especially on how it aims to achieve carbon dioxide reduction targets.
Key measures of the Bill include:
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