Select Committee on Trade and Industry Written Evidence


Memorandum by ScottishPower

  Thank you for agreeing to an introductory meeting in the House of Commons on Monday, which I greatly enjoyed.

  In the course of our discussions, I was pleased to be able to update you on ScottishPower's perspective on the Government's Energy Review.

  As the leading developer of wind power in the UK, ScottishPower welcomes the emphasis the Review places on reducing carbon emissions and safeguarding security of supply.

  We support moves towards a clearer, long-term framework for energy policy. Across a range of measures—including the Renewables Obligation, the future of the EU Emissions Trading Scheme beyond 2012, and the role of the regulatory authorities—clarity and consistency in market signals are of particular importance.

  This need for clear and consistent market signals is increasingly pressing if investment in new generation capacity is to flow, and the future energy shortfall faced by the UK addressed. UK generation now faces a real watershed; that, indeed, is one of the issues the Energy Review has set out to resolve.

  Based on a range of possible outcomes for plant retiral and demand growth, our view is that the UK's energy shortfall may be as much as 20 GW by 2015, and 27 GW by 2020. On current expectations 2015 will be too soon for any new nuclear or clean coal plant to be making a contribution to baseload generation. As long as the Renewables Obligation is allowed to continue in its current form, and the undue tinkering that will destroy investor confidence in the RO is avoided, renewables will be able to meet some, but not all, of the gap.

  There is a common expectation that the rest of the shortfall could be met in the interim by new CCGT plant. This expectation should be tempered by consideration of the likely impact on investment in new CCGT of an announcement of a major nuclear new build programme. There is a danger that such an announcement could undermine proposals for new CCGT investment, as the optimal operating period of these assets would be effectively curtailed. Unless approached with care, the consequence may be to actually exacerbate the prospects of UK power security over the next decade.

  I hope that these reflections will be of assistance to you as the Committee conducts its current inquiry into the Energy Review. If I and my ScottishPower colleagues can be of further assistance, please do not hesitate to contact me.

Philip Bowman

28 April 2006

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