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Predicting Future Energy Prices – Part 4

Electricity Market Reform

The UK government has embarked on a road to electric market reform to achieve the Government’s objectives on decarbonisation, renewables, security of supply and affordability.

Industry experts have called for simplification of the market, the need for increased storage facilities and more concrete plans on how the UK’s base load supply will be provided in a low carbon economy – for many nuclear is the only non-carbon option for this role.  Added to this some analysts predict power shortages from around 2015 as old power stations are taken offline before replacement sources are ready.

The consultation on the EMR finished in March and a White Paper giving legislative proposals to implement the new electricity market arrangements will be published in July with implementation beginning some time in 2012.

Current predictions estimate that it will cost £200 billion over the next 10 years to meet the UK’s energy demand and meet current carbon-reduction objectives.

The EMR should tackle some of the burning issues (no pun intended!) and hopefully resolve some important questions. Either way, it’s likely that the decisions made will have a major impact on the UK energy market for some time to come.

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