The Queen's Speech: Electricity market overhaul bids to bridge energy gap

An overhaul of the electricity market set out in the Queen's Speech aims to drive massive investment in low carbon power and bridge the looming energy gap.

Keeping the lights on as old coal and nuclear power plants are shut down in the next decade will require pouring £110 billion into energy supplies and the grid - more than double the current rate of investment - the Government has warned.

And the UK has legally-binding targets to meet on cutting greenhouse gas emissions and boosting renewables.

The Energy Bill will reform the electricity market to introduce long-term contracts that pay a steady rate of return for energy over the lifetime of new low-carbon generators.

The reforms aim to overcome the high capital cost of building nuclear power plants or offshore wind.

The Government also claims the move will reduce expected rises in energy bills by around £40 by 2030, so that the average bill will increase by £160 instead of the £200 rise predicted if the market were left as it is.

But MPs have suggested the system will work for nuclear but not for low carbon power such as offshore wind, and warned the plans amount to a subsidy for new nuclear reactors, something the Government has pledged not to provide.

And despite the planned reforms, efforts to create a nuclear renaissance have stalled, with E.ON and RWE npower pulling out of a venture in March to develop new power plants at Wylfa in North Wales and Oldbury-on-Severn, Gloucestershire.

The Energy Bill will also introduce an emissions performance standard to prevent construction of new coal plants which produce too much carbon dioxide.

PA