As expected, the energy bill increases support under the Renewables Obligation (RO) to make the more expensive renewables technologies attractive to investors. Production from offshore wind farms will be granted 1.5 renewables obligation certificates (ROCs) per megawatt hour instead of the current 1 ROC/MWh. ROCs can be redeemed for cash at a price set by market forces which are brought into play by the RO mechanism. The RO remains in place.
But nuclear, not renewable energy, was the outright scene-stealer, with energy companies being invited to bring forward plans to build new nuclear power stations. Alongside the energy bill, the government published a nuclear policy paper outlining plans for a market framework that will encourage new nuclear, including setting parameters for dealing with waste and decommissioning and streamlining the permitting process.
A third of the UK's generating capacity is due to come offline within the next 20 years and the country will be increasingly reliant on imported energy, says Energy Secretary John Hutton. "Set against the challenges of climate change and security of supply, the evidence in support of new nuclear power stations is compelling," he says. He stressed, though, that it will be for energy companies to fund, develop and build new nuclear power stations in the UK, including meeting the full costs of decommissioning and their full share of waste management costs.
A dog's breakfast
Despite the excitement created by the government's announcement little has changed materially for nuclear's prospects. Over past decades nothing, except the economics and public opposition, has prevented any company from building nuclear plant. Hutton's expectation now is that an expected higher price placed on carbon under a strengthened EU Emissions Trading Scheme (page 58) will improve the economics of nuclear relative to fossil fuel.
Environmental groups are predictably hostile to the plans, with Greenpeace dubbing the government's nuclear policy "a dog's breakfast" and pointing out that in the small print of the nuclear white paper the government admits that taxpayers may have to pick up the tab if operators default on their waste and decommissioning liabilities.
The new Scottish National Party government remains opposed to any new nuclear build north of the border. "We have massive potential for alternative clean, green energy. The installed renewables generating capacity already exceeds that of nuclear. In 2006, overall electricity generation in Scotland increased by nearly a tenth, while electricity generated from nuclear power in Scotland decreased by a quarter," says cabinet finance secretary John Swinney.
A note of caution about trying to mix large volumes of nuclear and renewables on the British power system was sounded by Matthew Leach from Surrey University. "Neither nuclear nor renewables are really flexible -- they're not there just when you want them; you can't turn them on and off very easily," he told the BBC. "They are also similar in that they have high investment costs and low running costs, so you want them to be running as much as possible; they are competing for the same share of the market."
The British Wind Energy Association (BWEA) is not worried about nuclear pushing wind off the system. The association's Gordon Edge says a new nuclear build program will merely replace retiring nuclear plant. "By 2017 there will be one new nuclear plant if they are lucky. Even if they then complete one nuclear power station a year you will still have less nuclear plant on the system than you have now."
Not a solution
Eventually, he says, if the government's plans are realised there could be 20% of electricity from nuclear and 30% from variable renewables. But well before then, there is likely to be a large degree of grid interconnection between the UK and mainland Europe which would alleviate integration of the two.
While steering clear of condemning the national government's decision to go nuclear, the BWEA warns that it is not a solution for the first decade. "Nuclear may well play a part in the UK's long term energy supply, but it cannot address the urgent need to fill the UK's growing energy gap over the next ten years," says the BWEA's Maria McCaffery. "The UK needs to take swift action to ensure the security of supply for our energy as our traditional supplies are retired. We cannot afford to wait until a new generation of nuclear is ready." She adds: "There are already enough wind energy applications within the planning system to reduce significantly the impending energy shortfall."