A leading energy economist has said that the UK government’s headline figure of £200bn to meet its energy needs in the next decade is overinflated.
Haley Hutson, energy principal at actuary LCP, said the figure is unnecessarily high and the government should look at again at its agenda – and budget – to meet its carbon cutting and energy security obligations.
She said the government should “look at plant already on the system” with a view to upgrades and overhauls rather than building more and more new power stations.
And she warned that the government’s Electricity Market Reform White Paper, due to be introduced as legislation this year, is putting off investors.
The EMR will introduce a carbon price floor, new long term contracts for low carbon electricity generation, an emissions performance standard and a capacity mechanism, yet details on all remain unclear.
“The EMR is creating uncertainty,” said Hutson, who has acted as a consultant for E.ON, Nuon, Vattenfall and Dong Energy.
She was speaking at the Marketforce Future of Utilities conference in London, where she unveiled a stochastic analytical software model to predict Britain’s energy market over the next 40 years.
The model calculates 1000 simulations in 30 minute time slices in an hour, computing 1 trillion calculations and 500 million outputs in 14 minutes.
She said using the model could give companies, governments or regulators an analysis of, for example, the price of gas, coal or carbon at any point in the next four decades and also determine what the demand for any fuel source might be.
Hutson said: “Analysis can help companies invest efficiently and manage the risks.”
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