Policy & Market


UK energy secretary aims to calm investors' fears 'in weeks'

UK energy secretary Ed Davey has a message for the seven wind turbine manufacturers that earlier this week warned him that perceived ongoing political risk is undermining the case for investment in Britain – "Relax".

“I do understand that there are investors who want as much information as possible – and we’re going to give them that,” Davey tells Recharge, following the open letter from the wind companies.

“I think the signals that they’ll pick up over the next few weeks will give them the confidence they need to invest.”

"In the next few weeks some of the key [EMR] questions that are outstanding – and there aren't that many, actually – will be answered."

Speaking on the sidelines of the Scottish Low Carbon Investment Forum, Davey expressed the sentiment that many in the renewables industry do not seem to appreciate how complicated and momentous the Electricity Market Reform (EMR) package is – or how transformative it will be to their businesses.

“Inevitably, when you’re making these kinds of major reforms, and you’re transforming the electricity market from one that has a bias towards fossil fuels to one that assists all low-carbon investment, that’s going to take a little bit of time.”

“But the [EMR] White Paper was only a year ago, and a year later we’ve got the draft bill ready and a timetable for the final bill,” he says.

“So actually, it’s pretty quick for such a dramatic change.”

Among the most keenly-observed aspects of EMR are the strike prices that underpin the renewables contracts-for-difference (CfD) mechanism, which is set to replace the Renewable Obligation Certificate (ROC) scheme.

Davey says that while strike prices for various renewables technologies will for several years be set “administratively, similar to ROC bands today”, he expects to see “technology-specific” auctions phased in as early as 2017.

Davey also shot down persistent suggestions that the Conservatives, which govern the UK in coalition alongside Davey’s Liberal Democrats, are in any way trying to water down the country’s renewables agenda.

“Let me be clear. The Prime Minister [David Cameron] is an absolute huge fan of renewables, and his support for things like the offshore industry has been tremendous,” Davey says.

As for whether the UK's finance minister, Chancellor George Osborne – seen as sceptical towards the green agenda – is also on board with the country’s long-term renewables and carbon emissions targets, Davey simply insists: “Yes.”

Earlier this year, Davey’s department successfully fended off calls from right-wing Conservatives to lower support for onshore wind as part of July’s Renewables Obligation banding review.

However, Osborne did manage to have language inserted into the statement maintaining that gas will continue to be “an important part of the energy mix well into – and beyond – 2030” – a phrase that many in the renewables industry have found disheartening.