The reforms outlined below would be in place by 2013, but renewable energy investors will be able to build under the Renewables Obligation until 2017. Rules for existing investments will, furthermore, be protected.

With increasing energy demand and an ageing electricity generation park, the UK will have to invest heavily over the next decade to keep a reliable power supply, and to meet the Government’s climate change targets.

DECC says a quarter of the UK’s generation capacity will need replacing by 2020 representing 19 GW. Some new gas-fired power stations will be needed to complement renewable energy and the first new nuclear power station.

According to targets, almost a third of the UK’s electricity must come from renewable energy sources by 2020 and the energy sector needs to be largely decarbonised during the 2030 to meet climate change goals.

On top of this, electricity demand could double by 2050 as vehicles and heating will increasingly be electric.

To achieve its goals, the UK Government says it will ensure the competitive market will remain intact, but that it is proposing four inter-locking policy instruments:

A carbon price floor with the Treasury providing greater support and certainty to the carbon price, which could lead to increased investment in low-carbon and renewable energy by providing clearer long-term prices for carbon in the power sector;

Long term contracts for low-carbon and renewable energy generation to attract more investment. Through a proposed ‘contract for difference’ feed-in tariff, the UK Government will agree clear, long-term contracts for top-up payment to low-carbon generators if wholesale prices are low, but also clawing back money for consumers if prices become higher than the cost of low-carbon generation. An alternative ‘premium’ feed-in tariff is also set out in the consultation;

Payments for the construction of reserve plants or demand reduction measures to keep supply secure. A capacity mechanism would ensure an adequate safety cushion at peak demand and intermittent periods; and

An emissions performance standard to ensure no new coal is built without carbon capture and storage (CCS).

Energy and Climate Change Secretary Chris Huhne, says: “These reforms lay the foundations for a sustainable economy, bringing billions in investment in the UK through greater certainty, safeguarding jobs up and down the supply chain, and giving the UK real competitive advantage in advanced energy technologies.

“More than £110 billion of investment is needed in new power stations and grid upgrades over the next decade, that’s double the rate of the last 10 years. Put simply, the current market is not fit to deliver this.”

He adds: “Without investment in renewables, new nuclear and carbon capture and storage, emissions will remain too high, we will become dependent on energy imports, and increasingly vulnerable to fossil fuel price volatility.

“Low-carbon technologies must be given the chance to become the dominant component in our electricity mix.

“In the new, reformed UK electricity market, the economics of low-carbon will stack up like nowhere else in the world. By 2030, three quarters of our electricity could be low-carbon.

“Crucially, our reforms will also make sure there is enough spare supply to keep the lights on reliably. They will protect the rules for existing investments. And, over the long term, they will achieve more, while resulting in bills lower than they would otherwise be.”

DECC says that reducing carbon intensity of the electricity mix from 500 g CO2/kWh today to 100 g Co2/kWh in 2030 “can be achieved at the same time as annual household electricity bills being around 4% or £30 lower on average in the five year period 2025-2030 then they would otherwise be if we left the current policy framework in place.”

Beyond 2030, household bills would remain lower and more stable than with today’s market structure.

Responses to the proposals on a carbon floor price should be made to the Treasury by 11 February, with final decisions expected in the Budget on 23 March 2011.

Responses to the other three components are invited by 10 March with final proposals expected in a White Paper later in the spring 2011.

Industry comments

Juliet Davenport, CEO of Good Energy, says: “Good Energy welcomes the Government’s commitment to review the electricity market, which is in desperate need of reform if we are to meet our renewable energy targets by 2020.

“We need this Government’s Electricity Market Reform to be radical but enduring. Encouraging low-carbon solutions is not enough. It needs to be aiming for a zero carbon energy market with a transparent support mechanism for all low-carbon technologies through the feed-in tariff. It also needs to ensure storage and demand side solutions are included in any capacity support mechanism. And this must be underpinned by a long-term, secure carbon price.”

James Cameron, Vice Chairman of Climate Change Capital, comments: “The electricity market reform proposals, in particular the long-term fixed price contracts for low-carbon electricity, could provide much needed certainty for investors over the right time-horizons. Together with effective carbon pricing, this package could finally make clean, green technologies permanently more attractive to investors than conventional polluting ones.

“Huge amounts of private capital are required to deliver Britain’s transition to a low-carbon economy and this package can help provide confidence for investors. As always, though, the devil will be in the detail and the Government must ensure they push this through at speed and not get derailed.”

Ian Marchant, Chief Executive of SSE, adds: “The first test of EMR is that the value of existing investments is protected as the market is reformed and it is therefore very welcome – and critically important – that the government is proposing robust provisions here.

“In the next two decades, substantial investment is needed to decarbonise the power sector and maintain security of supply whilst ensuring electricity remains affordable. Fundamentally, therefore, the EMR process needs to deliver a framework which encourages delivery of all of the key generation technologies needed over the next two decades – renewables, thermally-efficient gas-fired power stations, nuclear and carbon capture and storage (CCS) – and ensure an appropriate risk/reward balance for investment in these technologies.

“This requires an evolved market structure, which the EMR process is appropriately timed to deliver with a White Paper expected next summer and reforms set to be implemented by around 2013.

“Reforms should also reflect Scotland’s leading role in deployment of low carbon generation, with already half of renewables generation located in Scotland and attractive sites for development of CCS.

Source: www.renewableenergyfocus.com

So-called concentrating solar power uses hundreds of thousands of mirrors to turn water into steam. The steam turns a conventional turbine similar to those in coal-fired power plants. The technology, which is potentially cheaper than most types of renewable power, has captivated many engineers and financiers in the last two years, with an abrupt surge in new patents and plans for large power operations in Europe and the United States.

This year may be China’s turn. China is starting to build its own concentrating solar power plants, a technology more associated with California deserts than China’s countryside. And Chinese manufacturers are starting to think about exports, part of China’s effort to become the world’s main provider of alternative energy power equipment.

Yet concentrating solar power still faces formidable obstacles here, including government officials who are skeptical that the technology will be useful on a large scale in China.

Much of the country is cloudy or smoggy. Water is scarce. The sunniest places left for solar power are deserts deep in the interior, far from the energy-hungry coastal provinces that consume most of China’s electricity. Provinces deep in the interior have few skilled workers or engineers to maintain the automated gear that keeps mirrors focused on towers that transfer the heat from sunbeams into fluids.

Concentrating solar power “is not very suitable for China,” wrote Li Junfeng, a senior government energy policy maker, in a detailed e-mail reply to questions this week.

Yet the private sector in China is racing to embrace the technology anyway.

A California solar technology company and a Chinese power equipment manufacturer plan to sign a deal on Saturday for the construction of up to 2,000 megawatts of power plants using concentrating solar power over the next decade, executives from both companies said this week. That is equivalent to the output of a couple of nuclear power plants. They will start with a 92-megawatt plant in Yulin, a town in a semi-desert area of Shaanxi Province in central China.

The Chinese equipment manufacturer, Penglai Electric, hopes to work with other Chinese manufacturers to drive production costs down precipitously, clearing the way for exports, although these would require further approval from the California licensor of the technology, eSolar.

Eric Wang, the senior vice president for international business development at Penglai Electric, said that manufacturing mirrors, turbines, towers and other equipment in China instead of the United States could cut costs by at least half. That could make concentrating solar power more competitive with other forms of power generation around the world.

China’s Ministry of Science, the Beijing municipal government and the Chinese Academy of Sciences are already building Asia’s first concentrating solar power plant on the outskirts of Beijing, although it is only a pilot operation to generate 1.5 megawatts.

Preparations are also under way for the construction of a 50-megawatt concentrating solar power plant in Gansu Province in northwestern China, said Min Deqing, a renewable energy consultant in Lanzhou, the provincial capital of Gansu.

But while nuclear power, wind energy and photovoltaic solar panels have strong backing from China’s political leaders and enormous financing by government-owned banks, concentrating solar power still faces deep-rooted skepticism in senior ranks of the government.

Unlike in the United States, the roots of that skepticism do not lie in concerns about disrupting the habitat of rare species in sunny, desert areas – a worry that may block some attempts to build concentrating solar power plants in the Mojave Desert.

Mr. Li wrote that concentrating solar power works best when cheap water, cheap land and lots of sun are available in the same place – a rare combination in China. Mr. Li also expressed concern that concentrating solar power would prove more expensive per kilowatt-hour generated than photovoltaic solar power, a technology in which China is already the world’s low-cost supplier.

Mr. Li has a lot of influence on these issues. He is a deputy director general for energy research at the National Development and Reform Commission, the top economic planning agency in China. And he is the secretary general of the government-backed Chinese Renewable Energy Industries Association, which helps oversee these industries’ operations in China.

But Mr. Li did say that he saw a limited role for concentrating solar power, particularly in places where it could be combined with other power plants, or where it could be combined with a way to store power overnight. Penglai and eSolar hope to do both.

Water consumption, mainly to condense the steam after it has been used to generate electricity, is another potential weakness of the technology. Water tends to be scarce in deserts, of course. Penglai and eSolar are leaning toward air cooling instead of water cooling, at the price of cutting the efficiency of their plant.

Mr. Gross said the eSolar technology could also be used to create extra heat during the day, with the heat being stored and used to generate power at night – a form of the electricity storage sought by Mr. Li.

Despite the government’s skepticism, renewable energy investors remain enthusiastic about the potential for concentrating solar power projects in China. K. K. Chan, the chief executive of Nature Elements Capital, a renewable energy investment fund in Beijing, said that he had been looking at such deals in recent months after concluding that the valuations for photovoltaic solar projects were unreasonably high, possibly because that technology had such strong government backing.

Mr. Min in Lanzhou said that while there was little data yet on the cost of concentrating solar power, the price tag was likely to fall in China. “Eventually, when 100 percent domestically produced mirrors are used,” he said, “the cost will be lower than solar panel power plants.” 

Source: www.nytimes.com

He said: “With imagination, vision, determination – and with Europe’s help – our energy could be made up of solar energy from Seville, tidal power from Rathlin island and Torr Head; geothermal power from Reykjavik; hydro electric electricity from Norway; wind power from Denmark; wave power from the Kerry coast and biomass crops from Germany.”

Taking his inspiration from President Obama’s Jobs and the Green New Deal, he added: “An energy super grid is one element that could advance the Green New Deal – a proposal to create ‘green collar jobs’ for five million Europeans by mobilising 500 million euro of private and public investment over the next five years.”

Addressing the Greens’ Northern Ireland annual conference in Belfast he said in that new economy Northern Ireland was uniquely placed – not least in terms of its abundant renewable, and especially wind and marine, energy supplies.

“With the right political, business, union and environmental leadership and partnership, it could become a green economy leader,” said Mr Gormley.

The Greens’ sole Stormont Assembly member used the conference to accuse Northern Ireland’s Environment Minister Sammy Wilson of having “made an idiot of himself” on the international stage.

Mr Wilson is an outspoken sceptic of the argument that climate change is man made and Green MLA Brian Wilson questioned how, with his opinions, he could be tasked with implementing the Climate Change Act.

The minister recently censored a UK government made “Act on CO2″ advertisement in Northern Ireland, something which Brian Wilson said had made Northern Ireland look ridiculous throughout the world.

He said his namesake was “a minister who had made an idiot of himself”.

He added: “The minister’s views are completely incompatible with his role as Minister for the Environment and his responsibility to promote the fight against climate change as set out in the Programme for Government.”

Mr Wilson said that overall the Assembly’s progress as far as green issues were concerned had been dismal.

“In fact, it would seem to be stuck in reverse gear,” he added.  

(Source: www.belfasttelegraph.co.uk)