Select Committee on Environmental Audit Appendices to the Minutes of Evidence


Memorandum from the London Electricity Group


  This memorandum is submitted by London Electricity (LE) Group in response to the specific questions raised by the Environmental Audit Committee in its enquiry.


  LE Group is a major electricity producer, with nearly 5GW of installed capacity in England and Wales (7 per cent of the generation market). As a supplier, we currently serve 7 per cent of the combined gas and electricity market. We are also a major network operator, distributing some 20TWh of energy across our systems last year, and we recently acquired Eastern Distribution.[42]

  We have a proven commitment to renewable technologies, in both our supply and generation activities. Our generation subsidiary, London Power Company, is currently negotiating permission to build a wind farm off the coast of north Norfolk, which will be able to supply the annual requirements of 45,000 homes. On the retail side, we introduced a special green tariff last year to encourage the development of community-based renewable energy projects. Most recently we acquired the renewable interests of Northern Electric, which includes the development rights for an additional off shore wind project. In addition, we are separately investing in an innovative new technology of underwater turbines to harness the power of high tidal stream currents of the coast of North Devon. These initiatives together show our commitment to R&D, as well as project development of emerging renewable technologies.


  The key points we wish to make are:

    —  renewable technologies have a key role in meeting environmental and other energy policy goals over the short to medium term, and they form an essential ingredient in a low carbon future for the UK;

    —  LE Group remains strongly sceptical about the feasibility of achieving the annual targets to 2010 now enshrined in the Renewables Obligation (RO);

    —  looking beyond the present targets, we consider that the broad direction advocated by the PIU of continued development is appropriate, with the aim of achieving significantly increased targets by 2020. At this stage, however, further targets should be indicative rather than binding;

    —  a two-pronged approach to renewables support is necessary, based on direct support, as well as the RO. This is required to stimulate higher levels of market penetration by emerging technologies, and is essential if targets are to be significantly increased and if there is to be a realistic prospect of meeting them. Funding should not be restricted to renewable technologies, but should also be targeted at other low carbon options, including energy efficiency.

    —  LE Group does not see NETA as a particular inhibitor to attainment of significantly increased renewables build, though existing market rules could be flexed to make them more "renewables friendly";

    —  however, prospects for faster and deeper development of renewables does depend on implementation of programmes to remove planning barriers and to change regulatory incentives to enable distribution system operators to capture dynamic benefits of small scale distributed, generation; and

    —  existing programmes and support mechanisms introduced by the Government have enabled real progress towards sustainable energy policies. However, early progress is needed in identifying longer term market arrangements, preferably based on permit trading for emissions and a common carbon valuation, and on how the UK can make the transition to these.

February 2002

42   LE Group includes LPN and EPN, the public networks businesses, LES, the private networks business, LPC, the generation business, ECS, the metering services business, 24seven, the network operation and maintenance business, and London Electricity plc, the retail business which trades under the London Electricity, SWEB and Virgin Energy brands. Back

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