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Transmission revamp?

Analysis

What next for the government's energy review? . . .

The Department of Trade & Industry's long awaited Energy Review published last week was not the decisive policy document industry had hoped for.

As a Green Paper, the document represents an initial move to replace the 2003 Energy White Paper rather than an attempt to build on existing policy.

As a result, it contains little in the way of hard answers to Britain's looming energy crisis, in particular, what to do when the current generation of nuclear power plants expire.

'This report faces up to the current problems but does not offer any solutions, ' says former ICE Energy Board chairman David Anderson.

Instead it is 'a major step forward in the softening of the general public' for new nuclear power station, he adds.

Anderson adds the report 'is the first step forward on the road to clarity, ' but, as current ICE Energy Board chairman David Kerr agrees, is lacking detail.

They are especially concerned about the lack of attention given to stabilising the market.

As it stands the energy market is fickle. Gas prices are easily pushed up by political crises such as that in the Middle East and easily brought down by political stability and increased production.

Costs of gas and coal fired generation can also be affected by fluctuations in the cost of carbon quotas which are traded by energy producers under the potentially volatile European emissions trading scheme.

The Green Paper makes clear that the future energy mix is in the hands of the private sector, which largely reacts to the price of gas and the cost of emitting carbon.

A free market will naturally meet demand from the cheapest source. As the Green Paper carefully illustrates, if gas price is low - or anything other than very high - then the cost of carbon must be driven high to ensure nuclear power, renewables or other expensive options are viable.

The government hopes to produce a White Paper superceding the 2003 version by the turn of the year. This is expected to propose a policy for stabilising the market. How it plans to do this is not yet known.

'Market mechanisms, to an extent, are an issue for economists but engineers can play a role advising on the impact of those, ' says Kerr.

Some energy experts want a nuclear obligation, similar to the existing renewables obligation to force energy companies to provide a portion of electricity from nuclear power.

One thing that is clear from the paper is that government has listened to industry on the issue of planning.

Energy companies are happier with some aspects of the review. The Green Paper reveals that pre-licensing, which permits off the shelf proven designs to be accepted as safe in a public inquiry, will be allowed - a move welcomed by the industry.

New public inquiry rules are expected in spring 2007 to speed up planning consent for major energy projects.

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