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 measuresincluding
the Renewables Obligation, the future of the EU Emissions Trading
Scheme beyond 2012, and the role of the regulatory authoritiesclarity
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.
28 April 2006