Tim Yeo MP: Powering sustainable growth

The importance of renewable energy in the UK continues to grow. Our geographical location and available expertise has seen the development of a full portfolio of renewable generation technologies. Although the recent focus by Government on reducing the cost of ‘green levies’ on energy bills has not been helpful for investor confidence in green energy projects, if you look beyond the political posturing, there are many positives to draw from.

A new low-carbon support regime is nearly up and running. The Energy Act 2013 set in statute the key tenets of the Government’s Electricity Market Reform programme. Renewable projects can soon look forward to obtaining a Contract for Difference and the certainty of a strike price. The Levy Control Framework will provide a guaranteed level of consumer support for low-carbon technologies that will reach £7.6bn in 2020/21, although more clarity about the level of support that will be available into the 2020s would be useful. A carbon-intensity target for electricity generation in 2030, which should be set in 2016, will also provide a valuable signal for the renewable energy industry including its supply chain.

A focus on achieving value for money within this support framework will become increasingly important. The cost of renewables will rightly receive intense scrutiny although happily costs for most technologies continue to fall. Now that the strike prices for different technologies can be so easily compared, in contrast with the hard-to-understand Renewables Obligation regime, the public will probably become more engaged and vocal about what they are paying for. The Government is already rightly intending to move to a more competitive bidding process for the more mature technologies.

Finally, a final decision is looming on the EU’s 2030 package and whether it should include another renewable-energy target. Some are concerned that the UK Government’s current position lacks ambition on renewables in the 2020s and that technology neutral incentives do not help to achieve a suitable level of deployment. Others are making the case that a challenging emission-reduction target should be the focus of the deal, leaving member states flexibility about how they achieve this goal in the most cost-effective manner. This debate is not yet concluded.

Tim Yeo, Chairman of the House of Commons Energy and Climate Change Committee, Conservative MP for South Suffolk

This article appears in the report, The Economic Benefits of Renewable Energy: A potential windfall? , which is being launched in Parliament today by the Dods Renewable Energy Dialogue, a programme bringing together a group of organisations including Vestas, Co-operative Energy, JDR Cables and RSA with politicians to debate the economic potential of renewables.

The report will be launched at 12:45-14:15 today,in Dining Room A of the House of Commons.

For further information, please contact David.Tripepi-Lewis@dods.co.uk(020 7593 5661).