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UK Energy Policy 2016: Opportunity, risk and predictions

Energys Group, specialists in energy efficiency, offer our expert overview of the impactful policy news that will define business pathways through 2016.

CBI’s stark warning on policy opens year

The UK is at risk of jeopardising its energy security by failing to deliver a clear policy framework for low carbon development, the CBI has warned.

Its call comes as 18 business leaders have this January requested, ‘Clearer leadership and a more stable energy policy to ensure capacity is not compromised,’ The big hitters include Lloyds and ScottishPower.

Amber Rudd’s spokesperson maintains DECC will, ‘Set out more detail this year on our long term commitment to move to a low carbon economy,’ But, business clearly remains unconvinced that DECC’s 2016 agenda is fully formed.

Therefore, immediate work at the highest levels is required to stave off the energy threats.

2016’s game changing consultations; DSR, smarter energy, nuclear and energy efficiency taxation

DECC’s consultation on ensuring regulation encourages innovation closes on February 11, 2016. Businesses can respond at innovationplan@decc.gsi.gov.uk

This consultation seeks to ensure low carbon innovation meets the UK’s long term climate and energy security goals. Influence from the consultation should be published in spring 2016. It asks for feedback on smarter energy systems and demand side response, plus energy efficiency and nuclear.

Also, the first stage of the Government’s Energy Efficiency Taxation Review closed last year. It is crucial; this consultation covers the Climate Change Levy (CCL), the Carbon Reduction Commitment Energy Efficiency Scheme (CRC), Climate Change Agreements (CCA), mandatory greenhouse gas (GHG) reporting, the Energy Saving Opportunity Scheme (ESOS), Enhanced Capital Allowances (ECAs), and the Electricity Demand Reduction (EDR) pilot.

A formal response is due at Budget 2016, after which more detailed consultation may come, or even new law, potentially drawing all the above schemes into one, overarching regime later this year.

Another consultation is also due in early 2016 on the closure of all coal fired power stations by 2025. Together, the consultations must chart a path to improved energy security this year.

Electricity supply gap of 55% by 2025

A recent Institution of Mechanical Engineers report predicts the UK faces a 40-55% electricity supply gap by 2025. Plans to plug the gap by building Combined Cycle Gas Turbine (CCGT) plants are unrealistic, as the UK would need to build about 30 new CCGT plants in less than 10 years.

It is also too late to build enough nuclear plants to stop the breach, while Hinkley C policy framework is in crisis after EDF failed once again to commit to final investment on the project.

“Currently there are insufficient incentives for companies to invest in any sort of electricity infrastructure or innovation and worryingly even the Government’s own energy calculator does not allow for the scenarios that new energy policy points towards,” said Dr Jennifer Baxter, the Institution’s Head of Energy and Environment.

“Under current policy, it is almost impossible for UK electricity demand to be met by 2025. The UK National Infrastructure Commission must also take urgent action to prioritise greater energy efficiency by industry and clarify financial incentives for research and development of renewables, energy storage and combined heat and power.”

Energy efficiency’s pivotal role in 2016’s policy framework

Baxter is not alone in her realisation of how drastically energy efficiency can help, and how vital it is to place it centrally within 2016 policy improvements.

Kevin Cox, Managing Director of Energys Group, predicts: “Low carbon retrofits and energy efficient retrofit technologies can save the UK from some of the dangers today’s policy presents.

“But for this to happen, a new policy landscape must be drawn; one that puts efficiency, smart energy usage and metering plus bespoke, modern energy technologies at the heart of how we live and do business in the UK.”

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