Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Energy and Climate Change, what consideration her Department has given to the implications of whole-system costs of different forms of renewable energy generation (a) generally and (b) in future Contract for Difference auctions.

DECC recognises the importance of considering the whole system impacts (both costs and benefits) of different electricity technologies when formulating future government policy, since it is a crucial element in delivering secure, clean and affordable energy to consumers.

In order to continue to improve its evidence base in this area and inform future policy developments, DECC commissioned Frontier Economics to undertake a project on the Whole System Impacts of Electricity Generation Technologies.

The core aim of the project was to set out a comprehensive framework to define whole system impacts and their components and drivers, which can be applied to conventional, low-carbon and renewable large- and small-scale technologies. Following peer review by experts in the field of whole system impacts, DECC will publish the resulting methodology report in due course, taking into account timing restrictions relating to purdah(s).

Subsequently, the theoretical framework will be used to further systematise DECC’s modelling capability. Given the complex modelling involved and the need for a rigorous quality assurance process to ensure the analysis is robust, this is currently ongoing.

Once the project is completed, DECC will be able to draw on the improved evidence base developed through this project to contribute to informing future electricity market policy development, including for CFDs. Given that the electricity system continues to evolve, it is important that DECC reaches well-evidenced and robust long-term solutions.