UK Companies Need Clear Rules to Make $40 Billion Clean Power Investment

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Researched by Industrial Info Resources (Sugar Land, Texas) -- The United Kingdom’s Association of Electricity Producers (AEP) representing more than 90% of UK generating capacity, reports that its members have collectively committed to more than $14 billion to build new low-carbon power stations over the next five years. In addition, the majority of companies had adopted their own carbon reduction targets. These included schemes like EDF’s Energy Climate Commitment to reduce carbon intensity by 60% by 2020.

David Porter, Chief Executive of AEP said, “Electricity companies want to invest in new low-carbon generation. We estimate that they have to spend at least $40 billion by 2020 to fill the gap left by closing nuclear and coal-fired power stations. The vast majority of this investment will be in gas-fired plant, renewables and clean coal, as well as nuclear power, if the outcome of current consultations allows.”

To make these huge commitments it was vital that electricity production was profitable, added Porter. It was also vital that the regulatory regime for reduction of carbon emissions was clear and stable, with the limits on emissions known well into the future. At the moment, allowances beyond 2012 are still not known. Europe’s politicians needed to get that sorted out. When allowances have been agreed, then investors should have the confidence to put up the money needed to complete the transition to lower carbon electricity and maintain security of supply, he said.

The $14 billion of investments represents a 15,000 MW addition in generation capacity and a further 8,000 MW of clean coal projects and a considerable amount of renewable projects are under consideration. According to AEP the EU Emission Trading Scheme, which has been the subject of much criticism, will start to become much stricter next year and the government’s own carbon emission targets will send a further signal that carbon budgets are tightening. Clear and enduring policy is needed to avoid a slowdown in the investment the UK needs, says the AEP.

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