ASSOCIATIONS Cost of energy call for


evidence ADE and ACE joint response, January 2018: summary of the facts


Decentralised Energy (ADE) has been made. The following represents key extracts from the submission. ACE & ADE say: We welcome the


A


Cost of Energy review by Professor Dieter Helm and its ambition to achieve the lowest energy bills in Europe for the UK but consider that the scope and hence findings of the review have some significant flaws. The energy system is undergoing a period of fundamental change to a system that is smarter and decarbonised. It is crucial that we use this transition to make users, not supply, the organising principle of the system – to realise the greater system efficiencies and ensure energy users see the benefit, as well as the cost, of the transition. We support the principles expressed in the Helm Review. Reducing market intervention. The level of Government intervention within the


energy system is excessive and is now a barrier to providing the market signals towards a more user-led, smarter system. We support Helm’s view that such intervention should be reduced wherever possible and that support schemes, such as the Feed-in Tariff (FiT) and Contracts for Difference (CfD), should be gradually phased out at the same time as more explicit market signals are developed for flexibility services. Bank for legacy subsidy. Within this, we consider that a ‘bank’ for legacy subsidy


costs may be useful but there is too little detail within the Helm Review of the practical impact for users to arrive at a firm position. We are also unsure why legacy subsidy costs should be treated differently to new subsidy costs, considering that the benefits of a decarbonised energy system accrues to all users. Capacity statement to Parliament.We do not agree with Helm’s proposal to


require an annual statement to Parliament on the required capacity margin and guidance to the System Operator (SO) and Distribution System Operators (DSO), as it creates a risk of increased political intervention in the energy market. A single electricity capacity auction. We welcome the Helm Review’s interest in


better delivering holistic solutions which can secure capacity, flexibility and carbon reduction. Currently policy mechanisms do not deliver the most cost-effective, holistic solutions. Instead they each deliver a specific silo, resulting in policies pulling directly at one another. For example, the Contracts for Differences scheme aims to deliver specific forms of renewable generation at least cost but does not value security of supply or flexibility. The Capacity Market aims to deliver electricity security at least cost but does not


value carbon emissions. Under this siloed approach, solutions which provide benefits across both carbon and security, such as CHP and energy efficiency, are undervalued. Therefore, we would welcome a shift to seeing both carbon and security being explicitly rewarded within a single market framework, to prevent these two different markets from pulling in different directions, punishing holistic solutions, and driving up costs for consumers. While carbon pricing may theoretically provide a sufficient economic signal


within a capacity auction, Government decisions have consistently shown that economic and political realities will prevent sufficiently high carbon pricing to achieve that aim. When the Capacity Market was established, the current arrangements assumed a strong increase in the carbon price and carbon price floor through the 2020s to £75/tCO2e by 2030 – creating a carbon price that would be a genuine, significant investment signal for higher efficiency, lower carbon electricity. The result of such low carbon pricing is that lower carbon forms of capacity are not properly valued in Capacity Market bids. Auctions will procure too much higher carbon reserve, resulting in higher carbon emissions, and higher costs to consumers if later increases in carbon pricing push such new


JANUARY ‐ FEBRUARY 2018 UK POWER NEWS


joint submission from the Association for the Conservation of Energy (ACE) and the Association for


Dr Ogunshakin comments on CBI’s BREXIT speech


Dr Nelson Ogunshakin OBE, Chief Executive and President of the Association for Consultancy and Engineering (ACE), comments on the CBI’s speech on Brexit: “We urgently need a more pragmatic approach to the Brexit negotiations and this timely proposal by the CBI is an attempt to provide just that. However, in our view, a customs’ union only goes some of the ways to solving the conundrum of delivering a Brexit which is both politically acceptable and economically responsible.” He explains: “A customs union by


itself does not provide the assurances needed by our sector. Our industry needs continued unfettered access to skilled EU nationals and our recent research highlighted that a fifth of larger firms in our sector would consider moving staff abroad if that wasn’t the case. Equally, a customs union will do little for the 175,000 EU workers in construction whose jobs are at risk post-Brexit. All of this has huge knock-on effects on the delivery of key infrastructure across the country and on the economic stimulus that this provides.” He concludes: “The political and economic consequences of Brexit are wide-ranging and complex and cannot be solved just by remaining in the customs union. For the UK to remain in the customs union but not a member of the EU would result in a considerable loss of influence in Brussels, with no corresponding economic gain.” ACE supports a transition deal that


will allow market access in the short- term while leading to a comprehensive and unique trade deal which allows for economic collaboration with both EU and Non-EU markets.


The 2018 IDGTE Technology Seminar and Annual Luncheon is to be held at the Grange Tower Bridge Hotel. This will comprise a morning Seminar Session, followed by the traditional Luncheon and Guest Speakers in the afternoon.


short walk from Tower Hill tube station and Tower Gateway rail station, providing optimum accessibility to the Square Mile and London’s renowned financial district. There is on-street parking available outside Grange Tower Bridge Hotel (parking meter charges apply). The nearest car park is the Minories car park located on 1 Shorter street, which has 401 car park spaces. Please telephone 020 7481 3153 for details of current parking charges, or visit http://en.parkopedia.co.uk/ for more parking locations.The nearest tube station to Tower Bridge is Tower Hill (District and Circle lines). It is also located very close to the Fenchurch Street rail and Tower Gateway DLR station.s.


35 The Grange Tower Bridge Hotel is situated a


Decentralised Energy 6th Floor


Association for


10 Dean Farrar Street London SW1H 0DX


Tel: +44 (0)20 3031 8740 E­mail: info@theade.co.uk


The Institution of Diesel and Gas Turbine Engineers


Bedford Heights, Manton Lane


Bedford, MK41 7PH +44 (0)1234 214340 www.idgte.org enquiries@idgte.org


Don’t miss the Technology Seminar & 71st Annual Luncheon (IDGTE)


‐ Thursday, 3rd May, 2018


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