HC 742 Electricity Market Reform

07 February 2011

Electricity Market Reform: written evidence

Scottish Renewables is the representative body for the renewable energy sector in Scotland, representing the interests of more than 300 members from all technologies and their supply chain. As the members of the committee will be aware, Scotland accounts for more than two-thirds of all renewable electricity generation capacity in the UK.

I am writing with regard to the Committee’s call for evidence as part of the inquiry into the Electricity Market Reform proposals. We welcome the Committee’s commitment to look at the Department of Energy and Climate Change’s proposals, given that this will be the biggest shake up of the electricity market since privatisation. The proposals could have a massive impact on returns on investment in electricity generation, and it is no exaggeration to say that these have the potential to make or break progress towards Scotland's and the UK's 2020 renewable energy targets.

If the reforms and the ongoing review of grid charges are to meet their objective of substantial growth in low carbon electricity generation, the clear focus must be the delivery of a stable and long-lasting investment framework that reduces uncertainty and risk but that provides a sound business case for investors.

For these reasons it is imperative that the proposed changes are subject to detailed and expert scrutiny at this initial stage and during their further development.

Scottish Renewables has begun a process of detailed consultation and engagement with our members to ascertain their views on the opportunities, risks and relative merits of the proposals in order to come to an agreement on the optimal outcome for the industry from this process. We will submit a formal response to the UK government consultation by 10th March 2011 deadline. Until this process is complete we are unable to give a definitive position on the EMR process. However, at this stage we believe that the key areas that the Committee must focus on are:

· Encouraging new investment while supporting current plans for further increases in renewable electricity generation, both on and offshore, as well as protecting investments that have already been made.

· Cross over with Project TransmiT and the opportunity to create complementary regulatory frameworks for incentives and charges associated with renewable energy generation

· The devolution of powers to the Scottish Government and other devolved nations

· The transition to any new framework and the need to ensure that changes to existing financial support mechanisms for renewable electricity do not destabilise the market by reducing investor confidence or creating unsustainable impacts on the economics of renewable energy projects.

If you would like further information or any clarification on the points above please contact Grant Thoms, Public Affairs Manager at Scottish Renewables. We would also be happy to give oral evidence at any point in the Committee’s deliberations.

Yours sincerely

Niall Stuart

Chief Executive