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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