Conservative party victory likely to promote energy market competition, fast-track shale gas and roll-back renewables

May 09, 2015 No Comments by

Recent energy policy in the UK has been shaped by the Conservative and Liberal Democrat coalition. The energy minister was a Liberal Democrat, and thus the junior coalition partners exerted considerable influence on energy policy.

Energy policy can be neatly summarized through its relative focus on three competing priorities:

  1. Sustainability
  2. Affordability
  3. Security

The past 5 years have primarily focussed on sustainability, with a secondary focus on affordability. The Liberal Democrats championed sustainability evidenced by their support for renewable subsidies and energy efficiency measures. The Conservatives primary interest was affordability. The Conservatives commissioned an investigation into the competitive nature of the electricity market which was led by the Competition and Markets Authority (CMA) and senior figures noted that “green crap” should be removed from consumer energy bills.

Over the next 5 years, the primary focus is likely to be on affordability, with a secondary focus on security. The Conservative’s are likely to stick to the UK’s overarching carbon targets, while focusing on minimising costs. The removal of the Liberal Democrats is likely to shift policy away from sustainability. Renewables are likely to pay a heavy price: onshore wind subsidies will be removed with the focus perhaps shifting towards larger (though not necessarily cheaper) low-carbon interventions like nuclear power.

The Conservative manifesto provides pointers to the likely direction of future reforms.

Here’s a short summary of the aims and objectives of the Conservative party, as outlined in their manifesto:

On affordability …

  • Enhance affordability by promoting competition in the energy market and keeping bills as low as possible
    • Implement the recommendations of the Competition and Markets Authority in full
    • Continue to roll out Smart Meters by 2020, to enable customers to switch more easily (within one day) and promote greater demand participation

On security …

  • Secure energy supplies by developing shale gas, continuing investment in North Sea Oil and backing a “significant investment in new nuclear”
    • Shale gas development will include setting up a North of England sovereign wealth fund so that the shale gas resources are used to invest in the future of the North

On sustainability …

  • Provide start-up funding for new renewable technologies but restrict renewable subsidies
    • Promising new renewable technologies and research will receive start up funding
    • But “significant support” for renewables will only be provided to technologies which clearly represent value for money, with subsidies for onshore wind being discontinued
  • Continue to support the UK Climate Change Act by cutting emissions as “cost-effectively as possible”
    • Support low cost measures on energy efficiency, and aim to insulate a million homes over the next 5 years
    • Reject additional distorting and expensive power sector targets

References

Conservative Party Manifesto

Government and Energy Policy, Latest Smart Grid News, Thinking Grids

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The owner of Thinking Grids is a published author in smart grid topics ranging from smart monitoring and advanced computational techniques for distribution networks, power quality and stability. He's particularly interested in the business benefits of Smart Grid technology, and the overlap between information technology and electrical engineering.
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