EMR plans threaten offshore wind, warns CCC

9th September 2013

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Low support prices for offshore wind in the government's proposals to overhaul the electricity sector could jeapordise investment in the technology, say advisers

The independent committee on climate change (CCC) has urged the government to amend its electricity market reform (EMR) delivery plan, arguing that unrealistic expectations over the cost reductions for offshore wind generation could hamper deployment.

In a letter to the energy secretary, Lord Deben, chair of the CCC, praises much of the EMR delivery plan, but warns that proposed strike prices for offshore wind – the amount to be paid per MWh of electricity generated – fall too steeply after 2016/17.

The CCC describes initial strike prices of £155MWh up to 2015/16, and £150MWh in 2016/2017, as “broadly appropriate”. However, the scale of the planned reduction in 2018/19, to £135MWh, expects cost savings from the sector that are unlikely given current evidence, writes Deben.

Rather, the CCC suggests that a cut of £5MWh (to £140MWh) between 2016/17 and 2018/19 would be more in line with “achievable” savings.

The letter also warns that the wide range of scenarios outlined in the plan for electricity generation post-2020 is introducing doubt when investors require certainty.

It urges the government be clearer on its vision for electricity generation in the long term by reducing the number of scenarios in the delivery plan, introducing a 2030 decarbonisation target and/or publishing commercialisation strategies for the less mature renewable technologies, such as marine and tidal power.

“The delivery plan leaves a high degree of uncertainty about ambition in the 2020s,” writes Deben. “This is despite compelling evidence that a strategy focused on low-carbon investment through the 2020s is a low-regrets option and offers significant cost savings.

“Industry has been very clear that more certainty is required to support supply-chain investment.”

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