APPENDIX 22
Memorandum by E.ON UK
INQUIRY INTO:
the "particular considerations that should
apply to nuclear" new build (Question 3 of the review);
"the implications of increasing dependence
on gas imports" (Question 2 of the review);
and the capacity of microgeneration to meet
a substantial proportion of UK electricity demand in the medium
and long-term.
KEY POINTS
The UK energy sector requires major sustained
investment in energy infrastructure to cut CO2 emissions and maintain
security of electricity supply, but needs a wider range of low
or zero carbon power plant investment options than are currently
available, to reduce carbon emissions in line with the Government's
targets and to maintain diversity of fuel for power generation.
We and other energy companies will efficiently
deliver sufficient investment in a diverse portfolio of low carbon
assets provided there is a sustainable policy framework robust
to future uncertainty. De-centralised investment planning should
remain at the centre of the energy market.
UK energy policy should focus on:
— supporting the development of the
EU emissions trading scheme as the primary driver of low carbon
investment and on establishing international consensus on action
to tackle climate change, while recognising that this may either
not be achieved or will take some time to deliver;
— ensuring that mature low carbon technologies—such
as nuclear power and mature renewable technologies such as onshore
wind—are subject to an appropriate regulatory regime which
supports efficient and timely delivery of investments; and
— supporting financially the development
of emerging low carbon technologies (for example, carbon capture
and storage, wave/tidal power) that have the potential to play
a significant role in our future generation mix. Particular demonstration
requirements should be identified and companies would then propose
projects and compete for funds raised from the sale of permits
under Phase 2 of the EU ETS.
New nuclear plant potentially has a role in
contributing economically to the UK's CO2 reduction targets and,
in an era of high fossil fuel prices, to a diverse and secure
energy supply.
To make this a viable option for investment
by energy companies, the Government should build public and political
support for civil nuclear power; implement efficient and stable
planning and safety regulation processes which facilitate competition
between suppliers of standard international plant designs and
reduce development risk; provide for a secure and safe disposal
route for long-lived nuclear waste and for transfer to Government
of responsibility for this; and facilitate access to development
sites adjacent to existing nuclear facilities.
Increased dependence on imported gas is more
likely to give rise to price risks than security of supply risks.
The interrelationship between the UK and continental European
and LNG markets will strengthen with market conditions and prices
increasingly affected by conditions outside the UK.
The Government should support suppliers in diversifying
sources of gas by actively facilitating the development of more
gas storage, pipeline infrastructure and import facilities and
ensuring that the land use planning process fully and efficiently
reflects the Government's national energy policy objectives.
Microgeneration could provide a significant
proportion of the UK's electricity needs, although it is too early
to provide definitive estimates, as all microgeneration technologies
are at a relatively early stage of development.
The Government should support emerging microgeneration
technologies on a scale consistent with its potential contribution
to reducing UK carbon emissions economically, and implement a
regulatory and energy policy environment which is even-handed
(compared to larger scale sources of generation) and facilitates
the development of microgeneration on a long-term basis.
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