The report puts forward proposals on how to reduce costs in the energy industry whilst ensuring the UK meets its climate change targets. The review was commissioned by BEIS as part of the Industrial Strategy Green Paper in August 2017.
Below is a summary of the report's key findings:
- The cost of energy is too high and households and businesses have not benefited as much as they should from falling generation costs.
- It should be a central aim of government to radically simplify its interventions in the electricity market.
- The legacy costs from the Renewables Obligation Certificates (ROCs), the feed-in tariffs (FiTs) and lowcarbon contracts for difference (CfDs) are a major contributor to rising final prices, and should be separated out, ring-fenced, and placed in a ‘legacy bank’. They should be charged separately and explicitly on customer bills. Industrial customers should be exempt. Once taken out of the market, the underlying prices should then be falling.
- The most efficient way to meet the CCA target and the carbon budget is to set a universal carbon price.
- There should be a border carbon price to address the consequences of the UK adopting a unilateral
carbon production target. - FiTs and other low-carbon CfDs should be gradually phased out, and merged into a unified equivalent firm power (EFP) capacity auction.
- the role of Ofgem in network regulation should be significantly
diminished. - There should be a default tariff to replace the Standard Variable Tariff (SVT).
- Capping the margin would be the best way to meet the objectives of the new draft legislation.
- The government should issue an annual statement to Parliament, setting out the required capacity margins and providing guidance to the NSO and RSOs.
https://www.gov.uk/government/publicati ... ent-review
