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UTILITY Week 28th April 2017

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UTILITY WEEK | 28TH APRIL - 4TH MAY 2017 | 9 Policy & Regulation This week Conservatives could end green consensus Future Tory government could break away from cross-party consensus on decarbonisation It's "perfectly plausible" for a future Conservative government to row back on future contracts for difference (CfD) rounds and other decarbonisation schemes, an energy consultancy has warned. Speaking to Utility Week, the chief executive of Cornwall, Gareth Miller, said a future Conservative government could break away from the cross-party consensus on decarbonisation, which has been in place for almost two decades. In the event of a Conservative victory in June's gen- eral election and an increased majority, Miller said he could envisage a situation where "there is no such thing as an untouchable policy when it comes to supporting low-carbon generation". "There is an opportunity for a new government to pause, think and reconsider what they do," he said. The current CfD round closed last week (21 April) and the final results should be announced in the autumn. Miller said offshore wind was "likely to be the winner" in the current round, with a strike price below £70. EY's head of energy and environmental finance, Ben Warren, told Utility Week he also believed offshore wind "will come out as the clear winner" as a "consequence of the increasing competitiveness of the technology". "If that prediction is right, then the really interesting question will be how many [offshore wind] projects get an award, because there's probably only enough budget for two sensible-sized schemes and what price do they go for?" said Warren. JH ENERGY Flexibility study likely to be delayed The government's investigation into a smart and flexible energy system is likely to be delayed by the general election, to the dismay of the energy industry. The joint study, being con- ducted by the department for Business, Energy and Industrial Strategy (BEIS) and Ofgem, was enthusiastically welcomed by the energy industry as a signal of fresh thinking around energy policy. The study, which includes a call for industry evidence that closed in January, is due to address crucial technical and regulatory issues that are thought to be blocking the devel- opment of markets for energy storage, demand-side response and energy aggregation. It is also due to suggest a model for the evolution of dis- tribution network operators into more active "distribution system operators". ENERGY Calls to relax code change appeals Stakeholders should be allowed to lodge appeals against any Ofgem decision on changes to the codes governing the use of the energy system, a former code panel member has told Utility Week. The current arrangements, which prevent appeals being made in certain cases, mean the process fails to provide "an effective check and balance on such decisions". According to Peter Bolitho, a former member of the balanc- ing and settlement code (BSC) panel: "If the industry places too many alternative proposals on the table, Ofgem can always choose… a sub-optimal proposal or one proposed by a party sim- ply to mitigate the worst aspects of the main proposal." ENERGY Danger of energy market civil war The government must take an active role in the transforma- tion of the UK's energy system to prevent "a war of all against all" in an increasingly polarised energy market, Green Alliance has warned. The think-tank predicted that the falling cost of solar panels, batteries and electric vehicles would lead to an explosion in decentralised energy owned by consumers, many of whom will see an advantage in going off-grid. This, they claimed, will put them in conflict with large-scale generators who will see their business models undermined, as well as poorer, less-engaged customers who will be le to pay for Britain's electricity networks. Offshore wind: likely CfD winner Former energy secretary Sir Ed Davey has slammed the Green Investment Bank's (GIB) 11th-hour sale as "politically dubious". Davey, who has also con- firmed that he will be seeking the Liberal Democrat nomina- tion to stand again in his old seat of Kingston and Surbiton, accused the government of "sell- ing off the family silver", aer ministers confirmed this week that the GIB has been sold to Macquarie for £2.3 billion. PAN-UTILITY Green Investment Bank sale to Macquarie 'politically dubious' According to a statement by climate change minister Nick Hurd, under new ownership the GIB will look to invest at least £3 billion in the UK's green economy over the next three years. "It now makes sense to move it into the private sector where it will be free from the constraints of public sector own- ership," said the minister. But Davey said the move was "environmentally irresponsible" and "politically dubious" so close to parliament dissolv- ing before the 8 June general election. "The government clearly hopes to avoid parliamentary scrutiny," claimed Davey. "The toxic Tories are getting closer to Donald Trump every day and their record on renew- able energy since 2015 has been pathetic." The chairman of the House of Commons' Environmental Audit Committee, Mary Creagh, said the government has decided to sell the GIB without "transpar- ency or consideration of the alternatives". "Macquarie executives and government ministers need to give concrete guarantees about the bank's future and the capital investments it will make," insisted Creagh. The GIB's independent chair, Lord Smith of Kelvin, said the bank's board believes Macquarie "can be a good owner of GIB and we support the govern- ment's decision to sell GIB to Macquarie".

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