Reforms proposed in the new draft Energy Bill

This is a guest blog by Pinsent Masons.  They have undertaken a thorough analysis of the implications of the draft Energy Bill which was announced earlier this week by the Secretary of State for Energy and Climate Change.  

This package of reforms is probably the most significant development in the UK's energy market since privatisation in 1989. Notwithstanding that, there are still several areas where investors will need further reassurance in order to unlock the billions of pounds required for upgrading the UK's energy infrastructure. 

Following an intensive review by experts from across our specialist electricity, renewable and nuclear teams, we have developed an extensive update on the draft Energy Bill designed to highlight the important changes as they affect your business. This is broken down into sections as they relate to DECC's announcement, namely:

1. Electricity (Electricity Market Reform), incorporating:
Contracts for Difference 
Investment instruments 
Capacity Mechanism 
Conflicts of Interest 
Renewables transitional arrangements 
Emissions Performance Standard

2. Strategy and policy statement 

3. Nuclear regulation 

4. Government pipe-line and storage system 

5. Offshore transmission 

Simon Hobday's Blog on the EMR announcement is on the Pinsent Masons Out-Law site.


Comment from GEN

The plans for reform provide an overall context and direction for major energy investment over the long-term.  They tend to impact the larger players in the energy market.  Smaller, independent players are none too happy.  Good Energy suggest that "..Contracts for Difference (CFD) risks skewing the market towards nuclear and the Big Six at the expense of renewable energy and smaller suppliers."

From what we have read so far, these plans do not have any direct impact on those undertaking smaller scale green energy generation projects at the Feed-in Tariff scale (up to 5MW).