electricity pylon

BEIS issued a call for evidence earlier this month, seeking views on how best they should pursue and implement the findings and recommendations contained in the recent Helm Review.

The main findings of the Helm Review were that the cost of energy in the UK was too high with consumers failing to benefit from the falling costs of gas and coal, the efficiency gains from smart technologies and the swift drop in the cost of renewable generation.

Primary recommendations included a vast simplification of the electricity market, a retreat by Government from many of the roles it currently fulfils, a ring fencing of the legacy cost of ROCs, FITs and CFDs and the creation of a universal carbon price across the whole economy.

Also recommended was the phasing out of CFD’s and FIT subsidies and the creation of a unified equivalent firm power capacity auction in which participants would themselves pay the costs associated with intermittency of generation (heavily incentivising the inclusion of storage for non-baseload generation).

The Review acknowledged that predicting costs 8-10 years in the future in respect of the periodic review price caps for transmission and distribution companies was impractical given the current rate of technical change and advocated the roles of the National Grid and the regional DNO’s be relieved in part by the establishment of independent national system operator (NSO) and regional system operators (RSO’s).

Given the success of competitive auctions in bringing down costs in other areas, the Review proposed that NSO and RSO’s allow the same for network enhancements, generation and storage and demand side response.

The call for evidence seeks views from stakeholders on what the Government should be taking into account to implement the Review recommendations and any additional evidence stakeholders believe should be considered in achieving this. Mirroring the Review, it splits the areas on which views are sought into electricity generation, transmission/distribution and supply. A further area relating to cross-cutting is included as a catchall for views not specifically relevant elsewhere.

Responses are sought by the 5th January 2018.