United Kingdom

United Kingdom

Concern grows over future UK energy policy

Offshore wind investment hiatus as new legislation stalls

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Uncertainty about an increasingly-stalled overhaul to UK energy policy has escalated, despite inclusion of the draft energy bill in a list of legislation due to be tackled during the new parliamentary year.

As long as details of the country’s future energy policy remain unknown major players in UK offshore wind, such as Siemens, are expected to hold off from announcing new investments.

A list of legislation due to be considered during the new parliamentary year was delivered by the queen earlier this week. It included last year’s draft energy bill, which has been "carried over" because it failed to be finalised during the 2012/13 session.

No dates have yet been announced for the bill’s report stage, which represents the next step in its parliamentary progress. The energy bill’s report stage is expected to be contentious, with low-carbon lobbyists planning to propose an amendment that would force rapid decarbonisation ofUKelectricity generation.

Months of unexplained delay combined with news of the imminent departure of the civil servant leading the reform process has prompted a cacophony of voices urging the government to take action.

This week the Confederation of British Industry (CBI) warned of the business risks arising from the delay: "The Energy Bill’s journey has dragged on long enough - it is crucial for investors that it’s put on the statute books as soon as possible. There is a lot of concern about the lights going out in the next few years – without this investment there is a danger they will go off and not come back on."

One of the strongest signs that an unspoken investment hiatus has begun to take grip within the UKoffshore wind industry is continued silence from Siemens about whether it will build a turbine assembly facility at Hull. Its final decision was widely expected in January, but this did not come.UK business minister Vince Cable recently acknowledged Siemens’ need for more clarity on energy policy before committing to the facility.

Despite having publicly committed to replacing the UK’s existing renewable obligation certificate (ROC) system with a new method of incentivising low-carbon electricity generation based on contracts for difference (CfDs), some have begun to question whether the government might abandon the plan. Writing in the Financial Times yesterday, energy commentator Nick Butler argued that the energy bill is too complex and not flexible enough for a time when frequent adjustments to policy are needed.

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