Energy White paper published 12 July 2011

• UK Government estimates £110 billion needs to be spent on new generation capacity and an improved distribution network by 2020 (this is lower than some estimates, which are around the £200 billion mark, although if you include the Government's gas investment figures you do get to £200 billion);
• Expenditure is necessary to replace existing capacity, decarbonise supply and to meet increased demand;
• Average household bills will rise by approximately £160 as a result by 2030, but if we do nothing the estimate is that they will rise by approximately £200; and
• The Government is also clearly concerned about the security of supply of fossil fuels and is seeking to protect the UK in this regard. Security of supply is becoming an increasingly common justification for expenditure on renewables.

• Switch to a Feed in Tariff with Contracts for a Difference (FiT CfD) to replace the existing renewable obligation, although not before 2017. FiT CfD will be a long term contract with the aim of providing certainty to investors. They work by providing for a long term price (referred to as the strike price). If the market price is above the strike price, the generator returns money to the counterparty and, if it is below, the counterparty pays money to the generator. The identity of the counterparties have not yet been agreed and more work is being carried out to analyse the best method of achieving the aim.  The level of the FiT CfD will vary depending between power generation types as the ROC and the FiT do;
• Provisions for a carbon price floor as set out in the 2011 Budget;
• Government is very keen to move generation away from being dominated by the 6 big generators, and the FiT CfD and the Carbon Price Floor are seen as the best way to achieve this due to the ability to lower the cost of capital required for construction by providing certainty for low carbon technologies. Potential new entrants to the market are considered to be concentrated in the renewables sector;
• An Emissions Performance Standard to be created to limit the amount of carbon new fossil fuel plants can emit. The aim being that new coal plants will have to be fitted with carbon capture and storage. In practice this will encourage new combined cycle gas plants until carbon capture and storage is commercially operational on coal plants.  Note that carbon capture and storage demonstration plants are exempt, and that the Emissions Performance Standard is not retrospective;
• Creation of a Capacity Mechanism to provide for additional back up capacity. The precise form this will take is not certain at this stage, but it will either be on the basis of a strategic reserve and only used in certain circumstances or as offered by providers on a time to time basis in return for incentives; and
• Increases in efficiency assisted by a more flexible distribution network and smart meters.

• Seems mainly to be from those that think the rise in prices is too much or that there should be less emphasis on gas and more on renewables, plus some that not enough is being done to break the dominance of the 6 big generators.

• Technical update to white paper issued in Autumn 2011;
• Bill introduced in May 2012;
• Act becomes Royal Asset May 2013;
• Carbon Price Floor in place by early 2013;
• Secondary Legislation in place between late 2013 and the end of 2014;
• Emissions Performance Standards in force from late 2013;
• First FiT CfDs entered into in early 2014;
• Capacity Mechanism in place by the start of 2015; and
• FiT CfDs replace the renewable obligation in 2017.