Draft Energy Bill: Pre-legislative Scrutiny - Energy and Climate Change Contents


8  Timetable for delivery

210.  The Committee has previously emphasised the importance of timely delivery of the reforms. The White Paper stated "we intend that this legislation will reach the statue book by spring 2013".[265] The indicative roadmap in the draft Bill shows that the timetable has already slipped, with Royal Assent now expected in the fourth quarter of 2013 (which would require the bill to be carried-over from one parliamentary session to the next).[266] The Secretary of State confirmed to us that he expected Royal Assent at the end of calendar 2013 "at the latest".[267] However, we see no reason why, if introduced swiftly in the autumn as planned, the Bill could not reach the statute book by May 2013.

211.  We are concerned that the uncompleted work in designing CfDs and the capacity market, combined with the need to gain state aid clearance, could lead to further delays in the timetable.[268] This would have serious consequences for meeting our 2020 renewables and security of supply objectives. In order to prevent this from happening, it may be necessary to consider pushing back the closing date for the RO (currently planned for 2017), for example to 2020, to reflect any slippage in the EMR programme. [269] We note that an extension of the RO to enable slippage to be accommodated would not compromise the government's intention to combine underwriting for all low carbon technologies, since the date of 2018 as the year in which new nuclear power comes on stream has already slipped substantially.

212.  We heard particular concerns about the impact of uncertainty on offshore wind. The Combined Heat and Power Association told us:

The uncertainty over the EMR means that large scale renewables investments such as Round Three offshore wind projects are now on hold as they cannot be sure of commissioning before the 2017 date when the current support regime (the Renewables Obligation) will close to new entrants. For these projects the lack of certainty surrounding the CfD FiT combined with uncertainty over the timing of offshore transmission infrastructure development means that large developers and banks will not risk funding the development of a project, which, if not commissioned by 2017, has no certainty over its CfD revenue stream and its value.

213.  Delivery according to timetable is crucial if we are to meet our climate change and renewables targets and retain security of supply for 2020. We are extremely concerned that DECC's delivery timetable has already slipped, and that there is still a great deal of work that needs to be done to finalise the legislation. In addition, there is a risk that state aid clearance will delay the implementation of the new support measures. If questions about CfDs are not resolved swiftly, there is a real risk that new low-carbon projects in the pipeline will dry up, potentially jeopardising our 2020 targets. The Government must ensure that there are no further delays to the Bill and should aim for its formal passage in Parliament to be completed before the end of the current Session. If delays do occur, it may be necessary to delay closure of the RO in order to reflect slower progress in finalising the details of EMR.

Is a backup plan needed?

214.  Given the major questions that still need to be resolved about the CfD mechanism, several witnesses suggested that it would be wise to have a backup option in case some of the problems proved insoluble. SSE, along with several independent suppliers said that a PFiT needed to remain an option in the Bill.[270] WWF-UK called for other FiT options to be left open in the Bill, to allow for further flexibility should CfD be shown not to be the most suitable option for some or all renewables.[271] Others believed that the RO might need to be extended on a long-term basis.[272]

215.  However, most witnesses were keen to get the proposals right first time and hoped that alternative options would not be necessary.[273] Dr Kennedy of the Committee on Climate Change told us:

[Extending the RO] would have to be plan B, I think, but plan A is to get this set of arrangements right to make them such that they bring forward investment in renewables, and then you don't need to extend the renewables obligation. I think if we get it wrong, if we delay with the legislation, if we delay with the implementing arrangements or if we don't get the implementing arrangements right so that we have too much risk with the investor, you may then want to extend the renewables obligation, but that would be a bad thing. We have the opportunity to get EMR right.[274]

216.  We do not believe that a backup plan is necessary at this stage. However, if DECC does not resolve the outstanding questions regarding the CfD payment model, allocation of CfDs and routes to market before the autumn, it may be necessary to consider keeping open the option to extend the RO and/or convert it into a PFiT.


265   DECC, Planning our electric future: a White Paper for secure, affordable and low-carbon electricity, CM 8099, July 2011, para 43 Back

266   DECC, Electricity Market Reform: policy overview, Annex E: Electricity Market Reform: Indicative Electricity Market Reform Implementation Roadmap Back

267   Q 373 Back

268   Ev 130, Ev 151, Ev 168, Ev 172, Ev w86, Ev w89, Ev 178, Ev 187, Q 192 [Mr Benton] Back

269   Ev w29, Ev w86, Ev w98, Ev 178, Q 101 [Kennedy], Q 143 [Dr Edge] Back

270   Ev 151, Q 189 [Mr Smith, Mr Gill, Mr Rehmanwala]  Back

271   Ev 187 Back

272   Q 190 [Mr Gill] Back

273   Q 101 [Dr Kennedy], Q 247 [Mr Steedman]  Back

274   Q 101 [Dr Kennedy] Back


 
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Prepared 23 July 2012