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Electricity Market Reform
Energy Minister Fergus Ewing recently welcomed the publication of the draft UK Energy Bill, which outlines plans for Energy Market Reform.
Mr Ewing said that the Scottish Government supported the strengthening of market support for renewable electricity as well as carbon capture and storage, but warned that any reform must reflect Scotland’s devolved powers, deliver our low carbon energy potential and protect consumer interests. He warned the UK Government that the Scottish Government expects to be a partner in decision making about reform, not a consultee.
Mr Ewing said the UK Government will recognise that the purpose of Energy Market Reform is to promote renewable energy and not to provide subsidies for nuclear energy, and stressed the importance of certainty for the industry.
The draft Bill outlines plans to revise the way low-carbon electricity is supported to give low carbon energy generators certainty about the price they will receive for their electricity.
It also gives Scottish Ministers a statutory consultation role in the development of new arrangements for supporting low-carbon generation and over the setting of the strategic direction of Ofgem, the UK Energy Regulator.
Energy Minister Fergus Ewing said:
“I welcome the publication of the draft UK Energy Bill, which outlines a clear statutory role for Scottish Ministers in Electricity Market Reform.
“The Scottish Government supports the aims of strengthening market support for renewable electricity, and is working with UK Government in these reforms so they reflect Scotland’s powers and help realise our energy potential.
“It is essential the reforms send the right market signals for renewables and Carbon Capture and Storage technologies so that industry has clarity over the form of support it will receive. It is also essential these reforms build on the successes we have achieved in Scotland through effective use of our existing powers and an increasingly effective alignment of political, industry and investor effort.
“We and Ed Davey and his colleagues are acutely aware of the concerns which exist in industry and the investment hiatus which delay in announcement of the specific measures inevitably causes.
“Scotland already leads the world in renewable energy which is bringing in jobs and investment to communities across Scotland. We should focus on that potential, and the UK government must recognise that the purpose of this reform is to support renewable energy, not to provide subsidies for nuclear energy. Clean, green renewables must not lose out from increased support for nuclear.
“We have pressed for, and secured, a statutory consultation role for Scottish Ministers in creating a way to support low-carbon generation.
“Whilst welcoming this approach in principle we envisage our role not merely as consultees to the processes of decision making but as partners. We wish to play a full decision making role, not simply be asked about important or vital decisions after they have been made.
“But more work is still needed to ensure that we have a continued role as the new scheme continues to be developed, and to provide clarity to industry on the detail of the proposals.
“The Scottish Government will retain our existing powers over the Renewables Obligation, and we will work with UK Ministers to ensure a transition to new arrangements is consistent across the UK.
“However, we can only support this transition, and relinquish our control of the Renewables Obligation, if Scottish Ministers are given a suitable and similar role in a new framework which will work for both Scotland and the UK.”
Currently renewable energy in the UK is supported through the Renewable Obligation. The Energy Bill proposes that this is replaced with Contracts for Difference, which will provide long term revenue stability to investors through a guaranteed price for electricity, reducing investment risk and ultimately lowering costs to consumers.