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Yesterday
the Chancellor delivered his 2016 Budget to Parliament – read the full details of this year’s budget.
The
main announcements relating to DECC in the budget include:
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Innovation: The launch of phase one of a competition to identify the best value small modular nuclear reactor (SMR) design for the UK. £30m will also be made available for an advanced manufacturing programme to develop skills in this area. At least £50m will also be allocated for innovation in energy storage, demand-side response and other smart technologies and processes over the next 5 years.
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Contracts for Difference: The government has allocated £730m (per year for each year of 15 year contracts) which developers of less established technologies can bid for as part of three ‘CfD auctions’ to be held this parliament. The first auction will take place late 2016 when £290m (per year for the 15 year contract) will be made available. Support for offshore wind will be capped initially at £105 per megawatt hour (MWh). This will fall to £85/MWh for projects commissioning by 2026.
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Business Energy Tax: The Government has announced changes that will clarify business energy efficiency tax and policy, cut red tape and encourage businesses to invest in energy efficiency measures to help the UK decarbonise cost effectively. These changes include: consulting on a new reporting framework for business and public sector; closing the CRC Energy Efficiency Scheme; increasing the Climate Change Levy (CCL) to offset revenue lost through the closure of the CRC; and rebalancing CCL rates to encourage business to reduce gas use.
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Oil and Gas: Tax support worth £1 billion for the oil and gas industry which will support jobs and encourage investment in exploration and infrastructure. This includes effectively abolishing Petroleum Revenue Tax (a tax on profits from oil fields approved before 1993) and dramatically reducing the supplementary charge on oil and gas extraction.
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Consumer Delivery: The government has announced that it will separate Ofgem’s delivery arm E-Serve from Ofgem. This will allow Ofgem to focus on its core functions of economic regulation and promoting competition in the energy market. This announcement is
part of a review of our current approach to delivery to make it simpler for
the consumer, provide better value for money and meet DECC’s needs now and in
future.
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