The Department of Energy and Climate Change (Decc) is putting “significant extra resources into looking at energy efficiency” and demand-side management, according to secretary of state Ed Davey.
The department is “looking at options” to see whether energy efficiency can be included in the current market reform process or whether “it would make more sense to do it outside the Bill”, Davey said.
Lack of action on the demand side was a “fundamental flaw” of the government’s Energy Bill, according to a report by the Energy and Climate Change Committee, which recommended a year ago that it be at the heart of the Bill.
The committee had a number of concerns about the Bill – not least the form and counterparty for the Contracts for Difference (CfD) regime that will replace the Renewables Obligation. It said both Bill and CfD structure could be made workable but that Decc should revert to a single counterparty for the CfD and provide a new impact assessment.
Committee member Alan Whitehead said the single counterparty model Decc was working on was fantasy unless it was set up with a “big fund, bigger than the existing settlement body”. “It won’t fool anybody,” he said.
Whithead also said Decc could not yet raise the possibility of extending the RO because that would be admitting the “enormous” challenge it faced in devising a credible CfD regime. “There comes a point where you have to admit there’s a problem, but perhaps we’re not there yet,” he told Utility Week.
The committee also called for special measures for independent generators, saying their access to the market would be limited by the Bill. That problem must be solved before the final Bill was published, the MPs said.
The committee said it regarded as a “cast iron commitment” Decc’s statement that it prioritised meeting climate targets over the need to stay within the “levy cap”. It also called for new 2030 decarbonisation targets.
This article first appeared in Utility Week’s print edition of 3 August 2012.
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