Electricity Market Reform
In July 2011, the Department of Energy and Climate Change (DECC) published a White Paper ‘Planning our electric future: a White Paper for secure, affordable and low-carbon electricity’ which sets out the Coalition Government’s key measures to attract investment, reduce the impact on consumer bills, and create a secure mix of electricity sources including gas, new nuclear, renewables, and carbon capture and storage.
Key elements of the reform package include:
- A Carbon Price Floor (announced in Budget 2011) which is intended to reduce investor uncertainty, putting a fair price on carbon and providing a stronger incentive to invest in low-carbon generation now. Discussions are ongoing between the Northern Ireland Executive and Whitehall on the implications for Single Electricity Market arising from the introduction of a CPF in Northern Ireland.
- The introduction of new long-term contracts (Feed-in Tariff with Contracts for Difference) to provide stable financial incentives to invest in all forms of low-carbon electricity generation. This will result in the closure of the Renewables Obligation to new generation in 2017.
- An Emissions Performance Standard (EPS) set at 450g CO2 /kWh to reinforce the requirement that no new coal-fired power stations are built without CCS, but also to ensure necessary short-term investment in gas can take place. This is intended for England only. A decision on the introduction of an EPS in Northern Ireland will be taken during 2012.
- A Capacity Mechanism for Great Britain, including demand response as well as generation, which is needed to ensure future security of electricity supply. A Capacity Mechanism already operates in the Single Electricity Market so mechanism proposed in the White Paper will not apply in Northern Ireland.
Feed In Tariff with Contracts for Difference
DETI has been working with DECC on the implications for Northern Ireland renewable electricity generation arising from introduction of a Feed-In tariff with Contracts for Difference (FIT CfD) and the closure of the Renewables Obligation. During 2011, the Department, together with the Northern Ireland Authority for Utility Regulation (NIAUR), commissioned a study on the policy implications of the EMR proposals, specifically the proposal to replace the Renewables Obligation with a Feed-In Tariff for large scale (above 5MW) low carbon generation.
This study has now concluded and can be accessed at the link below. The study concludes that a FIT CfD would work in Northern Ireland and that the NIRO should close to new generation (and additional capacity) in 2017.
Northern Ireland Renewables Obligation
The potential implications for the NIRO are considered in the consultation on Proposed Changes to the Northern Ireland Renewables Obligation (NIRO) which was published in October 2011. This includes the potential introduction of a FIT CfD in Northern Ireland, the closure of the NIRO to new generation in 2017 and the introduction of a separate Feed-In Tariff for small scale incentivisation, for example like that in operation in Great Britain.
A decision on the final approach to be taken in Northern Ireland will be made later this year.
Electricity Market Reform information including DECC’s White Paper
Electricity Market Reform – Analysis of Policy Options
Consultation on Proposed Changes to the Northern Ireland Renewables Obligation (NIRO)
