Documents

The UK Competition and Markets Authority in 2016 calculated a detriment of £1.4 billion–£2 billion in Great Britain’s retail energy market, attributed to weak customer response. The government in 2019 imposed a tariff cap until competition is effective. Stephen Littlechild argues that the cap was a mistake: there was no such detriment and there are valid reasons for customers not changing supplier. The market was not previously uncompetitive and inefficient as suggested. The cap has rendered the sector loss-making and led to supplier exit. The assessments of effective competition by the Office of Gas and Electricity Markets have been arbitrary and implausible. Some alternative ways ahead are noted, but latest government policy invokes behavioural economics to propose even greater intervention. A postscript discusses dramatic latest developments.

Variable Renewable Energy (VRE) from wind and solar is frequently cited as the solution to UK Electricity decarbonisation. Technology learning curves suggest that, depending on location, wind and solar, which accounted for ~8% of global electricity generation in 2019, are currently, or projected to become, the “cheapest” source of new generation in most countries by 2030.

The Energy Transition represents an unprecedented challenge for Policy Makers. The speed and magnitude of emissions abatement demanded by the 2008 Climate Change Act, whose 4th & 5th carbon budgets are currently off course, combined with the subsequent increased ambition signalled by the UK 2050 Net-zero commitment made in 2019, along with the recent course-correcting commitment to target a 68% fall in emissions by 2030 vs. the 1990 baseline, requires the rapid promotion and diffusion of clean energy innovation with action extending to the hard-to-abate sectors dominated by buildings, industry and transport.