The government has announced a series of steps intended to reform the Capacity Market and secure energy supply. The reforms follow an earlier consultation, which was held in March.
The changes announced by the Department of Energy and Climate Change are being taken to better cater for the demands of energy during peak times, to help keep costs down for both businesses and domestic households alike, and to help secure the future of energy supply in the United Kingdom.
The core reforms
The reforms have resulted in a number of core changes. The first major transformation announced is that more energy is to be purchased, and the date for buying it is to be brought forward. There will also be increased sanctions for companies that do not comply with their Capacity Market agreements.
As a result of the reforms, the next energy auction is due to be held in January 2017 to help secure energy supplies for the coming year. The government is yet to set a target of how much energy is to be purchased, but it is likely to increase significantly in order to enhance capacity. However, a final decision will not be made until June, when the final details will be made public.
The Energy Bill
In a further effort to secure energy supply, the government has formerly introduced the Energy Bill. The bill includes a number of measures in order to help the government reach its commitments to affordable, greener forms of energy.
The Energy Act will introduce a number of powers to ensure stronger support for the North Sea oil and gas industry. It will also give local communities a greater say when it comes to the introduction of new wind farms, and it will mean the Renewables Obligation subsidy will face an earlier closure; it will no longer be available to new offshore wind projects.
As a result of the new act, the Oil and Gas Authority will be given a much broader range of powers, and the regulatory controls that were previously the responsibility of the Secretary of State are to be transferred to the Authority.
Commenting on the announcement, Amber Rudd, Secretary of State for Energy and Climate Change said:
“By strengthening the Oil and Gas Authority and giving it powers to drive greater collaboration and efficiency in the industry, this Act shows that the broad shoulders of the UK are committed to helping our oil and gas industry attract investment, support jobs and remain competitive for the future”.