Electricity Market Reform

RNS Number : 1123Y

Scottish & Southern Energy PLC

16 December 2010

 



SCOTTISH AND SOUTHERN ENERGY

ELECTRICITY MARKET REFORM

SSE (Scottish and Southern Energy plc) broadly welcomes the UK government's consultation on Electricity Market Reform (EMR) as the next step towards establishing a robust and enduring market framework for the electricity sector in the transition to a low carbon economy.

Ian Marchant, Chief Executive of SSE, said:

"The first test of EMR is that the value of existing investments is protected as the market is reformed and it is therefore very welcome - and critically important - that the government is proposing robust provisions here.   

"In the next two decades, substantial investment is needed to decarbonise the power sector and maintain security of supply whilst ensuring electricity remains affordable.  Fundamentally, therefore, the EMR process needs to deliver a framework which encourages delivery of all of the key generation technologies needed over the next two decades - renewables, thermally-efficient gas-fired power stations, nuclear and carbon capture and storage (CCS) - and ensure an appropriate risk/reward balance for investment in these technologies.

"This requires an evolved market structure, which the EMR process is appropriately timed to deliver with a White Paper expected next summer and reforms set to be implemented by around 2013.  

"Reforms should also reflect Scotland's leading role in deployment of low carbon generation, with already half of renewables generation located in Scotland and attractive sites for development of CCS. 

"SSE is well-placed to respond to changes resulting from EMR, with attractive options to invest in all the major generation technologies and in efficient use of electricity that is produced.  In assessing such options, financial discipline will remain paramount."

NOTE

The EMR consultation contains detailed analysis of four key policy issues. SSE's initial response to each is as follows:

·     A carbon price support mechanism: this could provide much needed certainty to the overall price of carbon. SSE will, however, need to assess carefully the impact in the shorter term of any additional costs and whether the mechanism proposed will provide the required degree of bankability;

·     Support for low carbon: SSE welcomes the clarity on the Renewables Obligation and its continued role in the medium term. Its current analysis suggests that the Premium Feed-in Tariff represents the best option proposed but SSE will carefully consider the alternatives suggested. It is also very important that the impacts of widening the scope of low carbon support on the wholesale market are properly taken into account and any unintended consequences from this are avoided;

·     Capacity mechanism: the key test for this will be whether it supports the needed investment in thermally-efficient gas-fired plant; and

·     The emissions performance standard (EPS): this provides a useful and strong emissions safety net but should not be lowered in a way that jeopardises security of energy supply.  In this context, delivering  CCS as a proven technology on both coal and gas is vital.

All these policies interact with each other and therefore SSE will be carefully analysing the coherence of a whole package of reforms, as well as its individual elements, over the next few months. 

 

END

 

 

MSCXQLFFBLFEFBV