Memorandum submitted by Carlton Power |
Carlton Power Limited is a UK independent power station
developer and has taken forward gas-fired generation projects
in the UK and Europe since the company was founded in 1995. To
date, we have been involved with the construction of over 1,800MWs
of installed electrical capacity and a further 2,380MW of consented
plants in the UK. Consequently we have an in-depth knowledge of
the energy market here in the UK and a strong sense of the changes
that need to be brought into force in order to ensure security
of supply and carbon targets without too high a cast being incurred
by the consumer.
We have been following the Select Committee's inquiries
relating to the EMR and welcome the attention given by the Committee
to the lack of liquidity in the market.
Carlton believe that many of the challenges that
the UK energy market, most notably new investment in generation,
can only be met if there is greater competition. However, since
privatisation and the market's consolidation by the Big 6, the
barriers to entry for independent players to participate in the
market have increased which in turn has worked against the interests
of domestic and industrial customers, and held back levels of
investment. The market has witnessed higher prices, a lack of
transparency and a reduction in competitionboth in supply
In summary, we believe the following:
- The "Big 6" do not have the capital
or the sources of new investment to fulfil the required investment
- Much of the EMR assumes, and indeed requires,
more market liquidity for the suggested changes to be effective.
- Greater liquidity increases competition and creates
a more accurate and market-driven wholesale price. The long term
wholesale price is a key signal in both encouraging and enabling
independent companies to invest in the construction of new generation
- The UK needs additional capacity, and a secure
capacity margin, but this should not be supplied by older, less
- The capacity market may will interfere with the
wholesale market and should be separated and run separately.
- Carlton Power thinks the re-introduction of a
self-supply licence condition (SSLC) would greatly help free up
the wholesale market.
- Wholesale market conditions are heavily stacked
towards the vertically integrated companies. The introduction
of compulsory auctions would further open up the wholesale market
and increase liquidity and competition.