Lords call for more competition and less intervention in energy market

A House of Lords committee has blamed “constant interventions by successive governments” for creating an electricity market that’s “opaque, complicated, and uncompetitive”.

The Economic Affairs Committee said the market “fails to deliver low-cost and secure electricity”.

A report by peers identified two key failures: a narrow amount of spare capacity, despite security of supply being the most important objective; and rising costs for consumers and businesses.

Concerns over whether nuclear power stations will be built is aggravating the security of supply issue, while consumer prices have risen by 58% since 2013 and industrial prices are the highest in Europe.

Government should ‘step back’

Lord Hollick, Chairman of the Economic Affairs Committee, said: “We would like to see the Government step back from the market and allow all generating technologies to compete against each other.

“It should establish an energy commission to ensure competitive auctions have independent oversight and are scrutinised carefully.
“Renewables play and will continue to play a crucial part in energy policy.

“A new national energy research centre would also help the UK to catch other countries up in the race to find cost-effective solutions to the challenges the world faces on energy.”

Experts question report

But a number of commentators raised questions about the report’s findings.

Michael Grubb, Professor of International Energy and Climate Change Policy at University College London said the paper failed to consider the impact of gas prices changes on electricity costs.

Michael Liebreich, founder of Bloomberg New Energy Finance, told the Carbon Brief website: “The committee appears to have decided that the biggest risk to the UK power grid’s reliability comes from the variability of renewable energy – despite accepting that the cost of managing this variability would add ‘certainly less’ than 1p per kWh to power prices.”

> Read the report

> Read the Carbon Brief analysis of the report