The formal consultation on the Government’s Electricity Market Reforms is now closed. The proposals, which seek to encourage investment in low-carbon generation, have attracted much comment and indeed criticism from a number of quarters, in and outside the energy industry
Carlton Power has been involved in the UK power generation market for more than 15 years and has been involved in the construction of more than 1800MW of installed generation capacity and 2380MW of consented plant in the UK. The company originated the 890MW Langage gas-fired power station in Devon, which is now owned and operated by Centrica, and is partnering Ireland’s ESB International on the Carrington 2 CCGT near Manchester.
Mike Benson (pictured) a director of Carlton Power, gives his view on the EMR and the steps that he wishes to see in the UK energy market:
What would be your ideal energy mix for the UK?
I think we need a robust mix of competitive technologies, including renewables, new nuclear and of course Gas CCGT. We all recognize the need to move towards a lower carbon industry, which is why gas is replacing much of the retiring coal powered generation. Gas remains an attractive option for many reasons, it has the fastest lead time, is a large scale generator, it is economically viable and new CCGT plants lower the UK carbon profile.
What issues do you think the EMR should address?
The EMR is primarily addressing issues such as new nuclear, renewable subsidies and getting an energy market in these areas that is attractive for investors. But we believe that another priority has to be creating a more competitive market, one that is open and transparent. If those issues aren’t addressed, then consumers and taxpayers will be paying more than necessary in the coming years and the UK will struggle to produce the new generating capacity that everyone agrees is required.
If the EMR could fix one issue, what should it be?
New capacity and renewable deployment are necessary, but the most important change should be market liquidity. At the moment, the UK is geared towards the ‘Big Six’, and that needs to change, the wholesale markets needs to be reformed.
What benefits would greater competition bring to consumers?
There has been a 43% rise in energy bills for consumers in the period 2008 – 2011, which represents a huge increase and has led to two investigations by Ofgem. Much of the problem comes from the fact that the current wholesale market lacks transparency about their pricing and transactions. Introducing further competition throughout the market would create competitive pricing for consumers and industry and encourage new investors to enter the market.
How would you bring more competition into the energy markets?
By re-introducing self-supply license conditions. An SSLC would ensure greater competition between retail and generation which would free up all areas of the energy market. This would guarantee the ‘Big 6’ could not just rely on their own generation and would create a wholesale market with greater liquidity, ensuring investors could enter more readily, would be better monitored and we would have proper competition. Emissions would also reduce as genuine competition favours more efficient plants.
For a copy of Carlton Power's EMR submission, please contact Taylor Keogh Communications.
