There has been significant concern in the ranks of Smart Energy advocates at the potential negative impact of the upcoming U.K. Electricity Market Reform (E.M.R) bill.

This is based on the potential implications it could have on both on carbon targets, and emerging smart grid services in Demand Side Response (D.S.R.) and Demand Side Management (D.S.M.).

For those not familiar with the sector, D.S.M. and D.S.R. are very important as they are necessary to enable high penetration of intermittent renewable generation such as solar and wind onto the power system.

The concern is centred on the capacity mechanism and related provisions in the E.M.R. bill. These provisions aim to provide adequate generating capacity to ensure that “the lights stay on” and that sufficient back-up generation is in operation to support the power system when renewables are producing at low volume.

The expectation is that much of this generating capacity will come from either nuclear or gas power plants. The issue that has been raising concerns, is that if the incentives for building nuclear and fossil fuel back-up power plants are not correctly structured this incentive could kill the fledgling D.S.M. and D.S.R. industries that focus on getting people to use less energy during the brief periods when renewables are at a low volume.

These concerns and others have been covered in more depth the following article: http://www.ecoseed.org/opinion/16121-clean-energy-s-battle-of-britain

Recent information from the Department of Energy and Climate Change (D.E.C.C) demonstrates their commitment and firm support of D.S.M. and D.S.R.

An industry briefing on the early design and direction of policy instruments around the capacity mechanism, indicates that the D.E.C.C. will be a major supporter of incentives for D.S.M. and D.S.R. So much so that D.S.M. and D.S.R. services could be brought into the energy system and earn revenues way ahead of fossil fuel based capacity as early as 2014.

There will be detractors and advocates who will claim that this is not enough, however given the highly complex set of objectives that needs to be addressed through this legislation, the outlook is certainly encouraging.

The scale at which these initial incentives will be deployed is likely to be low, however the foresight demonstrated in providing support for the acceleration of D.S.M. and D.S.R. is very positive. More important is that the availability of funding to support this critical market will not be restricted. The shaping of this policy is no simple task in a largely complex piece of legislation, and it is therefore very important that these areas keep the attention of advocates to ensure that this policy measure stays on course.

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