It was a delight, as always to be in Visby this week for Almedalen. I spoke at a seminar on the “Swedish super-model” and attended several interesting discussions on Europe, defence policy, Swedish politics and economics.
Energy policy and climate change were also themes, as they are for the UK government. Like all EU partners, the UK faces the challenge of meeting ambitious targets for reducing carbon emissions.
With around a fifth of Great Britain’s ageing power plants due to close over the coming decade, and further closures in the later 2020s, the UK needs huge investment in its energy infrastructure.
So the challenge is also an opportunity, including for Swedish investors.
Our Energy Minister, Ed Davey, talked to actual and potential investors in Stockholm in February, to illustrate the scale of our ambitions. Over the last week, in making further announcements on the detail of the support we’ll give to this low-carbon transition, he’s been able to spell out more of the detail. As he said,
“No other sector is equal in scale to the British power market, in terms of the opportunity that it offers to investors, and the scale of the infrastructure challenge.
“Our reforms will renew our electricity supply, attracting up to £110 billion investment in a mix of clean, secure power and demand reduction, and will support up to 250,000 jobs up and down the supply-chain.”
To underpin all this, the Government will introduce a Capacity Market from 2014. This will ensure sufficient electricity supplies from winter 2018 by attracting necessary investment in new and existing generation, as well as other forms of capacity such as demand response. Suppliers will bid to provide energy at guaranteed prices.
The government also announced details of the proposed “strike” prices that will apply in 2014 – 2019 for renewable electricity, including from onshore and offshore wind, tidal, wave, biomass conversion and large solar projects. By 2020 £7.6 billion a year will be spent in support of this renewable power programme.
Strike prices remove price volatility risk for electricity generated from low-carbon sources, providing greater certainty to generators and a better deal to consumers.
They form a core component of the UK Government’s strategy to bring forward investment in affordable low-carbon electricity generation – including renewables, Carbon Capture and Storage and new nuclear capacity.
The aim is that renewable energy makes up more than 30% of the UK’s electricity mix in 2020, helping significantly to decarbonise the power sector by 2030.
“Strike Prices for renewable technologies announced today aim to make the UK market one of the most attractive for developers of wind, wave, tidal, solar and other renewable technologies, whilst minimising the costs to consumers,” Ed Davey said.