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Government Bill offers insight into UK energy policy

The UK Government has released details of its Energy Bill, revealing its stance on the oil and gas industry, alongside renewable energy.

Support for the oil and gas industry makes up a substantial part of the Bill, which has already won cross-party support. It aims to ensure that the long-term survival of the industry despite falling oil prices and the expense of decommissioning old oil fields. The Bill will strengthen the Oil and Gas Authority (OGA), set up after the 2013 Wood Review of the industry.

The OGA’s new regulatory powers should encourage better cooperation and increased productivity, which will be crucial in attracting the investment needed to maximise the recovery of UK oil and gas reserves.

A Department of Energy and Climate Change spokesman said: “By reinvigorating our domestic oil and gas industry, we will also reduce our reliance on volatile foreign imports.”

Renewable energy policy

The Energy Bill also confirmed the early conclusion of the Renewables Obligation (RO) subsidy for onshore wind. The bill confirms a closure date of 31 March 2016 but does not offer information about grace periods for the RO.

In June, when energy minister Amber Rudd announced plans to end the subsidy early, she said there would be grace period to allow projects to gain the subsidy for up to a year after the closure. Projects likely to be eligible for the grace period are those that have, as of 18 June 2015, planning consents, grid connection agreements and proof they own the land.

Just prior to the publication of the Bill, the Department of Energy and Climate Change (DECC) asked developers for feedback on the proposals. The DECC consultation is still underway so it may be expected that the further information on the grace period will be added to the Bill later.

RO Certificates are being replaced by Contracts for Difference (CFD) auctions. An announcement is expected soon by DECC regarding onshore wind’s eligibility to qualify as the Conservative Party implements its manifesto pledge to end support for onshore wind.

Business energy price implications

The effects on business energy prices are as yet difficult to discern. In the short to medium term, more UK-sourced gas and oil may drive down suppliers’ prices and ensure supplies in case of instability (such as interruptions of supplies from Russia or the Middle East).

But recent setbacks to the Government’s drive for fracking may adversely impact medium term supply, especially with the expected decline in renewable energy.

This uncertain picture means it is a sensible precaution for small to medium sized businesses to lock in low prices now. The time and effort spent calling around suppliers can be cut to a single call of 20 minutes. specialise in UK SMEs and our personal service has earned us the top rating for business energy compare and switch sites on Trustpilot. Give us a call on 0330 0100 251 or fill in the form at the top right of the page to start saving now.





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