I've been enjoying a spell of fairly intensive contract work - hence the gap in blog posts. However, I've now had a chance to glance at DECC's electricity market reform proposals. All-in-all they aim to do the right sorts of things:
1) Long-term firm(ish) contracts for clean generation. These should reduce uncertainty and encourage more clean generation provided that the details can be sorted out. The preferred model is one based on contracts for differences which the market knows all about from privatisation. The trick is pitching the original PPA correctly.
2) Capacity payments. (Bring back LOLP*VOLL??!!??). These are needed to encourage potentially uneconomic peaking/reserve plant. My initial reaction to the proposed capacity margin manager (system operator?) and tender process is that it feels rather clunky and a bit of a step into the dark. My comment re LOLP*VOLL is not entirely tongue in cheek.
3) Carbon price support. Well - I've banged on about this before in this blog. The one thing that will worry a lot of people is that it is likely to benefit nuclear. This is not an issue as far as I'm concerned but does purturb some of my "greener" friends.
4) Emissions performance standard. Again, the devil will be in the detail but, clearly, coalers without CCS will be disadvantaged.
So far so good.
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