The announcement noted current arrangements have to be reformed to allow equal access to the electricity market for wind power and other renewable electricity technologies.
A government press release said the Department of Energy and Climate Change and the Treasury together have started consultations on fundamental reforms to the electricity market to ensure the UK can meet its climate goals and have a secure, affordable supply of electricity in the long term.
According to an accompanying 131-page report, called the Electricity Market Reform Consultation Document, demand for electricity in the UK may double by 2050.
The report said that one-quarter of the nation’s existing capacity will need to be replaced by 2020 and that the power sector needs to lead the decarbonisation of the UK economy.
Noting that the Committee on Climate Change recently proposed that the power sector should be close to zero-carbon by 2030, the report added about 30% of the nation’s electricity in 2020 needs to come from onshore and offshore wind power and other renewable sources, up from 7% today.
The report went on to say that at least €130bn would be needed in new generation and transmission assets in electricity in the next 10 years — over double the rate of the last decade.
“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,” Energy and Climate Change Secretary Chris Huhne said in the press release.
“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.”
Nick Molho, Head of Energy Policy at WWF-UK, said he welcomed the government’s recognition that fundamental reform of the market is needed if the UK is to successfully decarbonise its power sector in a sustainable and cost-efficient manner.
“Rapid decarbonisation could actually provide great economic growth to the UK if the right incentives are focussed on the right technologies,” Molho added.
Economic Secretary to the Treasury Justine Greening said the launch of the consultation process is the “the first step towards getting the investment we need in low carbon technology and more energy efficient homes and businesses.”
Responses to components of electricity market reform are invited by 10 March 2011, with final proposals expected in late Spring.