Letter: Energy Policy Disarray

Article excerpt

Sir: 27 March was the first anniversary of the New Electricity Trading Arrangements (Neta), created by Ofgem and the Department of Trade and Industry to turn electricity into a traded, commodity product. Neta has had significant adverse impacts for renewables and Combined Heat and Power (CHP) - the twin sustainable energy technologies the Government is promoting in response to the challenge of climate change.

Following the introduction of Neta, Ofgem reported a fall in output of CHP plant of at least 61 per cent. The DTI have highlighted that CHP plant already approved will now not be built. Revenues for renewable generators have similarly deteriorated, with some reports suggesting a fall of up to 45 per cent. Certain studies have suggested the best commercial strategy for some wind plant would be not to operate at all. Other small generators have been similarly effected. It is little surprise that coal imports and carbon dioxide emissions are now increasing.

There is widespread concern that Neta is failing to meet its objective of being cost-reflective. In its Energy Review the Cabinet Office highlighted the deleterious impact of Neta, and suggested legislation may be needed now to keep the Government's climate change targets on track.

These circumstances present a text-book study of the mismatch at the heart of energy policy between environmental and economic objectives. In the midst of this confusion, with DTI yet to give Ofgem a clear legislative brief in this area, a large proportion of the sustainable energy sector is now in a downward spiral of job losses and retraction. …