Is the Energy Bill bankable? That's the question that now needs an answer as over the next decade £110 billion or so of new investment into our low carbon energy infrastructure must take place to ensure our energy security and meet our carbon reduction objectives. The inclusion in the Energy Bill of a levy cap of up to £7.6bn a year, in today's money, by 2020 is welcome. It should provide far more certainty that new projects moving from their development to construction phase will have adequate revenues. However, until the detail of the strike price for the various technologies has been agreed and the relationship between the price, the capacity and the total cap is clarified it is too premature to fully welcome this measure. The price must be right to ensure projects receive adequate returns to be built quickly and at scale. Until the strike price is confirmed the freeze on investment in new large scale low carbon energy projects will continue and the Bill remains work in progress. The news that the Coalition Government has decided to defer to 2016 the inclusion of a carbon target out to 2030 is disappointing as it misses an important opportunity to send an immediate long term signal to the market that the overall policy to decarbonise the electricity sector is set. Overall the Energy Bill, assuming strike prices are published quickly and are set adequately to generate commercial returns, will have done enough in the short-term to bank and re-boot the low carbon energy sector but it could have done so much more.
Tom Delay, Chief Executive of the Carbon Trust