Britain Proposes Incentives for Low-Carbon Investment

The U.K. government outlined plans to encourage 110 billion pounds ($170 billion) of investment in the electricity sector needed to replace aging power stations and upgrade the power grid by 2020.

Queen Elizabeth II, opening the new legislative session in Parliament in London today, announced measures to guarantee power prices for renewable generators and nuclear plants through so-called contracts for difference. The new Energy Bill will also create a “capacity market,” ensuring the security of electricity supply by paying producers for backup supplies when wind, solar and marine power fall short.

“My government will continue with legislation to update energy infrastructure,” the monarch told lawmakers in the upper House of Lords, speaking on behalf of Prime Minister David Cameron’s Conservative-led coalition.

The bill also contains investment contracts in low-carbon power supply to enable early investment in advance of the contracts for difference coming into force in 2014.

It includes measures to enable consumers to secure the best energy tariff and force suppliers to provide clearer and simpler information on bills. The legislation also seeks to incentivize reductions in electricity usage from business and households and includes the power to set a target range for the decarbonization of the power sector.

In a separate Water Bill, the government aims to make water supplies more resilient by encouraging development of new sources and making it easier for companies to sell water to each other.

The legislation seeks to increase choice for business customers and encourage new companies to enter the industry. It will consolidate the water treatment licensing regime to reduce bureaucracy and encourage uptake of sustainable drainage systems.

To contact the reporter on this story: Kitty Donaldson in London at kdonaldson1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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