The UK White Paper presents the overall reform of the UK electricity system,aiming at designing a smart, flexible and responsive electricity system that provides for secure, low-carbon and affordable electricity supply. The UK power system needs to tackle 5 main challenges, namely:
- - Supply security, as old and polluting generation plants are bound to close (20GW by 2020) and as the system needs to adapt to higher levels of intermittent (wind) and inflexible generation (nuclear).
- - The need for electricity mix decarbonisation to reach 2020 RE targets -15% of primary energy needs from RE.
- - The increase in generation capacity to meet rising demand (transport sector electrification needs) in parallel with energy savings and efficiency practices.
- - Great need for cost-efficient investments to avoid high increases in cost of electricity, considering that carbon price and environmental policies are likely to lead to higher bills in the future.
The government has identified several key tools, central to the reform strategy, that would allow for the transition to a decarbonised energy system to happen, namely:
- - The Feed in tariffs with Contract for Difference, expected to start by 2014, will provide a clear, stable and predictable revenue stream for investors. None of the tariff adjustments are retroactive.
- - The Carbon Price Floor, expected to be in force by 2013, would guarantee a fair price on carbon and provide a stronger incentive to encourage investment in low carbon generation.
- - The Emission Performance Standard (EPS) expected to be in force by 2013, equivalent to 450g CO2/kWh at baseload, to limit the amount of carbon new fossil-fuel power plants can emit.
Engaging with energy consumers to reduce demand will also become a priority both in the electricity and the heating sectors, where the Green deal will help to reduce cost and carbon emissions in buildings, with smart electricity and gas meters. On the short term, the market design reform shall allow for a smooth transition and investments to continue. Therefore, the existing Renewables Obligation will continue for existing projects supported by the scheme (principle of no retrospective change) and new ones until March 31st 2017. Between 2011 and 2017 new renewable energy generators will have a one-off choice between Renewable obligation support of feed-in tariff. The reform will also be included in the devolution process at the national scale.