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Redpoint looks forward to the forthcoming debate on the UK’s future energy market

London, 25th March 2010 – Commenting on the Energy Market Assessment report released by the Treasury and the Department for Energy and Climate Change (DECC) alongside yesterday’s budget, Redpoint Energy has said that much work will need to be done by the entire industry following the upcoming election to promote stability in the UK energy market and to meet our climate change objectives through to 2050.  The report identifies the likely increasing convergence between power, heat and transport sectors in this timeframe and Redpoint feels it is clear that policy will increasingly need to be co-ordinated and consistent.

Redpoint also said that while it is possible that any problems facing the UK energy market may not become evident until 2020, the decisive and enduring changes to be consulted on will need to be instigated well before this date to protect investor confidence.

Redpoint broadly agrees with the issues raised by the Energy Market Assessment.  The consultancy was interested to see a wide range of options on the table for the longer term, some, including feed-in tariffs for large scale generation, previously discounted from the agenda to date.  Redpoint believes that clear definition of the issues to be addressed, and careful alignment of the appropriate incentives, will be essential: for example, different solutions may be needed to deliver the flexibility to the system compared to overall capacity.

As the start of the UK roll-out of smart meters in 2012 approaches, the consultancy noted the mention of the role of the demand side in the report. Oliver Rix, a Redpoint director, says: “Any energy market reforms will need to provide a framework that encourages efficient levels of investment in demand-side projects, and not just solutions that focus on generation. The success of the ‘smart grid’ will depend on a market structure that appropriately incentivises the full range of market participants in delivering flexibility.”

Rix continues: “Equally important is the ability to embrace emerging technologies. At a time when there is potential for an explosion in innovative new technologies and initiatives that could transform our energy system, we need to take great care to avoid setting policy that locks any future developments out of the energy market.”