Tories pledge energy revolution (GB)

From the Financial Times
By Ed Crooks, Energy Editor Published: December 7 2007 02:00 | Last updated: December 7 2007 02:00

David Cameron has promised a "decentralised energy revolution", pledging fixed subsidised prices for businesses and homes that sell electricity to the grid, as a way to cut carbon dioxide emissions and strengthen energy security.

He raised doubts about a new wave of investment in nuclear power stations, saying: "I think there's an element to the government's approach that is really quite irresponsible. Because the problems of nuclear waste haven't yet been dealt with, [and] they've got to be dealt with in order to make any new investment possible."

The report setting out the details of the plan committed the Conservatives to replacing the system of renewables obligation certificates, used to subsidise renewable electricity generation, with a scheme that the party will set out next year.

Mr Cameron's support for decentralised energy was praised by environmental groups and criticised by the electricity industry.

The scale of the change envisaged is limited, however. The Conservatives suggested that by 2020, 5 per cent of homes might be generating their own electricity from sources such as small combined heat and power boilers, wind turbines and solar panels.

Dieter Helm, an energy expert at New College, Oxford, praised aspects of the Conservative plans, but added: "If the numbers they expect are that small, then they will have to get most of their emissions reductions from somewhere else."

Speaking at the Islington headquarters of Greenpeace - a location unlikely to have been selected by any of his predecessors - Mr Cameron set out a package of support for micro-generation including "feed-in tariffs": set prices, varying according to the type of generation used, that would be guaranteed to households and businesses selling electricity to the grid.

Such tariffs had been highly successful in Germany, he said, stimulating much faster growth in renewable energy than in Britain and the creation of more than 250,000 jobs in wind energy alone.

"Our plans will help create a mass market for micro-generation," he said.

Ofgem, the energy regulator, has pointed out that the renewables obligation, which subsidises electricity from renewable sources, is a relatively expensive way of cutting carbon dioxide emissions, and its cost is rising.

Ofgem argued in a submission to the government in September that comparison with other subsidy schemes showed that "feed-in tariffs have been most successful at developing renewable energy markets".

However, David Porter of the Association of Electricity Producers said Mr Cameron's proposals were "another example of politicians prescribing answers".

He called on the Conservatives and Labour to "agree clear and long-term emission limits for the electricity industry, and leave it to electricity companies and their investors to decide the most economic way of delivering electricity securely and cheaply within those limits".

The threat to the ROC system, which has been highly lucrative for investors in some projects such as on-shore wind farms, also caused concern. Peter Ainsworth, shadow environment secretary, said any change to the system would not affect projects under way.

But the report said the Tories would next year set out plans to "restructure the mechanisms of support so that they are less bureaucratic and provide proper incentives for forms of low carbon large-scale decentralised generation which have not hitherto benefited".
Copyright The Financial Times Limited 2007