The energy is very crucial to Britain’s goal for a cleaner and more sustainable energy future, but there are several obstacles facing the MPs when it comes to the little aspects.
Earlier this week, MPs query on the energy bill delve deeper into the details for the first time. This energy bill is supposedly going to keep the lights turned on while at the same time lessening carbon based energy. It really does matter to customers just as it is important to businesses and investors. Although there is still quite a long way for the bill to be ratified as a law, the bill has already made quite a stir as key questions are seeking finer explanations to the finer details.
The first question that needs to be addressed is will the government be able to make good on all their responsibilities as promise? The stipulated powers in the bill according to the plan will supposedly give the government the initiative in deciding what kind of generation technologies will take over and at what scale, when and who will carry out this colossal energy shift. This is regarded as a noteworthy form of intervention basically with the amount it will need to procure resources by the public sector.
Another question that needs to be answered is does the bill really support utility investment at realistic parameters? The UK energy utility sector is spending an estimate of £10bn and predicted to increase over the next decade by an estimate of 50 %. In the light of this matter, the proposed contracts for differences (CFDs) is a tempting alternative as they give investors a preset and fixed rate for the electricity they produce over the terms and conditions of the contract. This will highly depend upon the original price being much cost effective which simply means that the government will have to drive a reasonable deal on nuclear with the EDF and this government or the future will have to resist the temptation to interfere with the terms of the contract.
However, there is a third and very severe reference to affordability which is up to this point remains relatively undisclosed. In the new world envisioned by the bill, suppliers will have to pay taxes for a central body in order for carbon generators to be paid accordingly for their contracts every month. The supplier will then have to perform the tedious task of guessing the amount of low carbon electricity to generate at any given month.
Any supplier will have to deeply reflect this rather erratic cash flow volatility in their prices they will be charging their customers unless of course the government has carefully studied the specifics and failsafe of the design. With the prices constantly being pushed up, this could potentially increase the cost of capital for supply businesses and if the government can’t seem to get this right it will eventually force smaller suppliers out of the market which in turn is not good for customers or any innovators in the industry.