Source · Select Committees · Business and Trade Committee
Recommendation 4
4
Deferred
Paragraph: 29
Publish comprehensive, long-term delivery plan for decarbonised power system by end of 2023.
Recommendation
We reiterate the calls of both the Climate Change Committee and National Audit Office for the Government to publish a comprehensive, long-term delivery plan for a decarbonised power system by 2035. The creation of a new Department for Energy Security and Net Zero should provide the impetus and Ministerial capacity to do this. This plan should recognise the time needed to decarbonise the different aspects of the electricity system as well as the sequencing involved. We recommend that this delivery plan sets out clear roadmaps and milestones as well as contingency plans for key risks and uncertainties. It should also focus on whole system costs. We ask the Government to publish this delivery plan no later than by the end of 2023.
Government Response Summary
The government's response discusses ongoing work related to Contracts for Difference (CfD) auction parameters, budgets, and engagement with industry, but does not commit to publishing a comprehensive long-term delivery plan for a decarbonised power system by the end of 2023.
Paragraph Reference:
29
Government Response
Deferred
HM Government
Deferred
12. The Government sets Contracts for Difference auction parameters to balance carefully the need to secure new low carbon electricity deployment with the cost to bill payers. The budget for Allocation Round 5 (AR5) was set to reflect the firm pipeline of eligible projects known at that time. Once National Grid ESO has assessed applications and provided the Secretary of State with a valuation of all eligible projects, he will have the opportunity to increase the AR5 budget to reflect more accurately the actual pipeline of eligible projects. The AR5 Administrative Strike Prices (the maximum price a technology can receive per MWh of generation) were published in December 2022 and cannot be changed for this round. ASPs are based on the department’s latest view of potential project costs and future revenues, which are consistent with cost assumptions in the upcoming 2023 Electricity Generation Costs report. The ASP Methodology, which sets out how ASPs are calculated, includes consideration of project costs. This methodology is reviewed before every CfD round. Work for Allocation Round 6 has already begun. The Government continues to engage with industry stakeholders to understand better their concerns about cost pressures, which are impacting the sector globally, not just in the UK. It is expected that the broad inflationary protection offered by the scheme’s indexation to the Consumer Price Index (CPI) continues to be an attractive aspect of the CfD compared to most other schemes.