ENA Bulletin 12 April

Issue 271: Tuesday 12th April 2011  

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ENA welcome smart meter announcement  

Networks welcomed government plans for the national smart meter rollout two weeks ago. This came with the DECC publication of its response to the Smart Metering Implementation Prospectus (SMIP). ENA welcomed their conclusions and proposals as part of the SMIP, which included the recommendations made by the energy network companies.  

ENA were pleased to see guidance for the energy industry that will help to drive forward the implementation of smart meters. Effective development of an integrated, ‘smarter’ energy network is a critical part of our low carbon future. The networks have a vital role to play in delivering a secure, sustainable and affordable energy for the UK and we were pleased the Energy Minister, Charles Hendry, recognises the intrinsic link between smart meters and smart grids. 

The data from smart meters will be essential to support the development of smart grids. Through better informed consumers and improved monitoring or network performance achieved, our members will be able to manage the demand and supply of energy in a more cost-effective and environmentally sustainable way.  

A report commissioned by ENA and published by KEMA last month suggested a radical change in the relationship between the energy network companies and the public that will see consumers empowered to make the right decisions about their usage.  

The KEMA report can be found here.   

The DECC SMIP Response can be found here.   

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Budget’s energy highlights  

The Budget two weeks ago had some headlines for the energy sector. Fuel duty was cut by 1p per litre and the planned inflation rise in fuel duty due in April was delayed until 2012. The annual 1p above inflation "fuel escalator" rise was also scrapped until 2015. However the very large sting in the tail was that these measures were to be paid for by £2bn extra taxes on North Sea oil and gas firms. The industry immediately claimed this would impact as much on gas supply as oil supply. The North Sea oil and gas industry were caught off guard on this but so apparently was the DECC Secretary who only heard about it the day before the announcement. The debate on this continues.  

Meanwhile on the green economy there were other announcements. The Carbon price floor for the power sector was introduced. The price will start at around £16 per tonne of carbon dioxide in 2013 and move to a target price of £30 per tonne in 2020. The Chancellor said this would “provide the incentive for billions of pounds of new investment in our dilapidated energy infrastructure.” Climate Change Agreements were extended to 2023. The Chancellor also announced that the Climate Change Levy discount on electricity for those who sign up would rise from 65% to 80% from April 2013.  

On the Green Investment Bank Mr Osborne said £2bn would be added to £1bn already announced to be funded from asset sales and underwritten by the Treasury.  He also announced that the Bank would start operation one year earlier than planned - in 2012. From 2015-16, and subject to the overall debt target being met, it would be allowed to borrow and invest.  The Chancellor said  “it will leverage an additional £15 billion of private sector investment in green projects over this Parliament.”  

The Chancellor said that “green taxes will increase as a proportion of our total tax revenues, as we promised.” Despite this on energy prices Mr Osborne said he would “closely follow developments in the energy sector in the light of the OFGEM review published on the previous Monday.”  

The Chancellor also had something to say about planning. He announced that the Government would expect all bodies involved in planning to prioritise growth and jobs.  To achieve this, a new presumption in favour of sustainable development would be introduced, so that the default answer to development is 'yes'. The Government would retain existing controls on the greenbelt – but would remove the nationally imposed targets on the use of previously developed land. They would also allow certain use class changes; introduce time limits on applications and pilot auctions of planning permission on land.  

On the skills agenda the Chancellor said there would be 40,000 apprenticeships for young unemployed people with a total of 250,000 more apprenticeships over the next four years. The 1,500 higher level apprenticeships across the whole of England would be increased by 10,000. The 12 new University Technical Colleges would be doubled to at least 24. Finally the 20,000 young people on the new work experience scheme will be increased to 100,000 places over the next two years.  

Full details of the Budget can be read here. 

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Scottish Manifestos launched  

As the elections to the Scottish Parliament and Welsh Assembly get underway last week saw a number of manifestos launched in Scotland. The Scottish Labour Party, Scottish Liberal Democrats and Scottish Conservatives all published their manifestos. There were some clear similarities between the parties on energy policy with some perhaps predictable differences. Below the Bulletin provides some analysis of the policy announcements so far. The next edition will see analysis of the Scottish National Party’s Manifesto as well as the main Welsh political Party’s manifestos.  

They all see Scotland’s renewable energy potential as key to the future of Scotland’s economy. Scottish Labour says they will ensure “Scotland is a net exporter of energy and will work to improve grid connections between Scotland and the rest of the UK and Europe to capitalise on this opportunity”. The Scottish Liberal Democrats say “Scotland could provide 25 per cent of the natural European resources for tidal and wind power and 10 per cent for wave power.” The Scottish Conservatives say “they are determined that Scotland should be the place where a new generation of marine energy sources are developed”.  

Another key area of agreement is energy efficiency. Scottish Labour say “they are determined to drive energy efficiency within our energy system and will tackle heat loss in energy generation by seeking to introduce schemes to capture and use surplus heat from the power stations via new ‘smart’ heat grids”. The Scottish Liberal Democrats say “their first priority is to take substantial action on energy efficiency pointing out that homes account for more than a quarter of all of Scotland’s emissions.” They say they will “allocate £250 million from the Investing in Scotland’s Future Fund to accelerate massively the insulation of homes and buildings in Scotland, including in the private rented sector and hard-to-treat properties.” The Scottish Conservatives say “the first step to decarbonising our economy and ensuring energy security is reducing energy consumption”.  

On CCS Scottish Labour say they will not consent to new, non-replacement fossil fuel power stations “unless they can demonstrate effective carbon capture and storage technology from the outset”. The Scottish Liberal Democrats say they will “support the development of carbon capture and storage technology for use on existing power stations and as a potential avenue for export”. They “do not see the need for a new coal fired power station at Hunterston”. The Scottish Conservatives say they “want Britain to lead the world in Carbon Capture and Storage”. They would like to see the £1 billion UK fund for CCS to be invested at Longannet.  

On renewable energy Scottish Labour support the target of ensuring that 80 per cent of energy comes from renewables by 2020. To encourage the development of marine technology they will double the value of the Saltire prize to £20 million. The Scottish Liberal Democrats say they will set a target for Scotland to generate the equivalent of 100 per cent of Scotland's electricity consumption from renewable sources by 2025. They will work with communities and developers and operators to “guarantee fair and meaningful community benefits from commercial renewable energy developments, including allowing communities that host projects to keep the additional business rates they generate”. The Scottish Conservatives say they are “determined that Scotland should be the place where a new generation of marine energy sources are developed”.  

Scottish Labour will “support the continuing contribution of the offshore oil and gas industry to our economy, whilst also seeking the transfer of skills and expertise in offshore renewables”.  

The Scottish Liberal Democrats will “work with the UK Government to ensure initiatives on transmission charging and electricity market reform reflect the specific needs of Scottish consumers and producers”.  

On new nuclear Scottish Labour say any application for consent “will be considered on its merits, in terms of safety, environmental impact, the local community and other planning considerations”. The Scottish Liberal Democrats will “continue to oppose the construction of new nuclear power plants in Scotland”. The Scottish Conservatives say they will “end the policy of the current Scottish Government of refusing to consider replacement of existing nuclear power generating capacity. Instead, they would consider any proposals to build on existing sites on their own merits. However, they would not permit any new sites to be used. Additionally, they will amend the National Planning Framework in order to designate the replacement of existing nuclear power generating capacity as National Developments”.  

The Scottish labour Manifesto can be read here. 

The Scottish Liberal Democrat Manifesto can be read here.  

The Scottish Conservatives Manifesto can be read here. 

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Government comes to the defence of energy infrastructure  

Speaking to an audience of often vociferous campaigners against energy infrastructure, the members of the Campaign to Protect of Rural England (CPRE) the DECC Secretary said the day after the budget that the electrification of Britain “marked a fundamental change not just in our landscape, but in the social contract.” “From that day” he went on to say, “it became increasingly clear that government had a core responsibility to ensure electricity supplies are safe, secure and affordable”.  

Addressing the CPRE gathering that included a determined group of passionate campaigners against energy networks infrastructure Mr Huhne said there were “no simple solutions”.  He said “whether you wish to see electricity carried above ground by pylons or buried within the earth in cables, there are environmental - and economic – consequences”.  

In what seemed a new occupation for Ministers at DECC Charles Hendry came to the defence of network infrastructure and the government’s policy following an article in The Times suffused with visions of a bygone pre-electric age full of references to the artist Constable.  

Writing in a letter to The Times the Energy Minister made clear that “we will need new infrastructure in the coming years to connect the new low-carbon power plants to the grid if we want to keep the lights on”.  

He went on to say that his Department had not “tried to make it harder for planning inspectors to ban pylons” as The Times had said. Mr Hendry said the price control for new infrastructure is for Ofgem to decide and DECC has not blocked any parts of it.  

He concluded that “the Government has listened very carefully to all the views on overhead lines and is considering how best to respond to them as it finalises the energy National Policy Statements. Subject to the Weightman Report on nuclear safety this is likely to be in the autumn.  

Thank you for making that clear Mr Hendry.  

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