An estimated £110 billion of private sector investment into the electricity sector is set to be unlocked with the publication of the Electricity Market Reform Delivery Plan.
The investment is needed by 2020 alongside measures that will improve the security of the supply of electricity, now made possible by the Energy Bill receiving Royal Assent yesterday.
This now provides the confidence needed to investors and the industry to provide investment to the energy sector and additionally makes it a legal obligation of the Government to ensure the UK's energy generation capacity is maintained, whilst also reducing emissions.
The new measures will support up to a quarter of a million jobs, 200,000 of which will be 'green' jobs in the renewable energy sector.
Over £31 billion has already been invested in renewable generator projects since 2010, and this is expected to attract a further £40 billion of investment by 2020. This would reduce carbon emissions by around 20 million tonnes and would provide enough electricity to power 10 million houses.
Secretary of State for Energy and Climate Change, Edward Davey said;
"We have driven the Energy Bill through Parliament on time to send out a clear signal to investors and industry. We have delivered the certainty they need and confirmed Britain's position as one of the most attractive countries in the world to invest in energy generation."
"We are now able to build on the measures already in place to deliver cleaner energy, affordable bills, energy security and the creation of thousands of skilled green jobs across the UK."
Additional announcements have been given alongside the Electricity Market Reform Delivery Plan today:
The first EMR Delivery Plan sets out strike prices for renewable technologies under Contracts for Difference (CfD) as well as the analysis that underpins these decisions.
Accompanying the Plan is an updated version of the CfD, with improvements to the contract terms to support the ability of developers to bring forward investment at lower cost to consumers. Coupled with the strike prices, this package will make the UK market one of the most attractive countries in the world for clean energy developers.
The Government is considering the introduction of competition for more established low carbon technologies once the CfD regime is introduced, pending a decision on this in early 2014. This falls in line with new EU guidelines laid out on competition.
The Government has issued draft investment contracts to the sixteen new renewables projects that have progressed to the next stage of the 'FID Enabling for Renewables process'. Ten of these projects have been informed they are provisionally affordable under the budget caps announced on 4th December, but all are able to remain in the process until it is completed, and the contracts are awarded, due in spring 2014.
A Capacity Market is to be introduced which will work by providing regular payments to capacity providers so that they are available to generate energy when capacity is tight, or face penalties. This will drive investment in generation whilst ensuring costs are kept low. The Government today confirmed the level of system security that will be needed under this mechanism.
Ofgem has also today approved a request from National Grid to develop new services to ensure that we have adequate capacity in the period before the Capacity Market is up and running. This will see existing and mothballed facilities becoming available to generate power to meet additional demand as required.