UK set for energy overhaul

The UK is publish proposals in the next few days for a major overhaul of its electricity market, designed to encourage large investment in CO2 energy.

United Kingdom, plans over the next many of his dirty coal-fired power plants shut down its aging fleet of nuclear reactors to replace and build large offshore wind farms.

Reuters the Thanet offshore wind farm off the coast of Kent, southern England

But makes companies say missing the financial incentives from fossil fuels to renewable energy sources and go nuclear, and call for greater certainty, you can draw what are probably massive investment in expensive low-carbon technologies.

Britain has one of the liberalized energy markets in the world with many competing vendors and some controls on electricity prices.

But a consensus has emerged that requires investment in the next 10 years to replace aging infrastructure and the country's climate change objectives to meet the market needs to be reformed if Britain is to raise the £ 200 billion ($ 316 billion).

The issue of incentives is addressed in the Government consultation on reform of the electricity market market, which starts later this month. Ministers say the proposals it contained fundamental reform is Britain's electricity could lead, because it was privatised in 30 years ago.

Yet is it to worry about the price. "Inevitably come these changes to the cost of rising bills to consumers," says Roger Reynolds, utilities, and renewable energy specialist at Nomura. "Managing the potential consumer backlash is a major political challenge."

The consultation, which will last until next spring is expected to comprise a plan to a lower limit for the carbon price create. The current price of allowances that emit program CO2 emissions trading under the EU is widely considered too low to encourage green investment. Ministers want to introduce a top up tax on fossil energy generators, which kicks in when the carbon price falls below a certain level. It expected to be part of the next u.k. budget to be unveiled in the spring.

The Government favours payments for low-carbon power generation capacity. These would companies for your production capacity grid accessible, if the offer is tight reward - also much of the time which it plants in idle.

This idea is secured by Electricité de France SA makes French, the company that British nuclear revival is spearhead. EDF plans for the construction of four new reactors in the United Kingdom by 2025, with the first unit in the year 2018 launch. But it has made it clear, it will not go ahead until Britain's electricity market is outdated.

Will include a CO2 commitment that provide utilities to a certain proportion of energy from CO2 sources such as nuclear energy; debate other ideas and an emissions can output performance standard, which would limit the amount of carbon dioxide of a new power plant.

Feed-in tariffs, which effectively makes a renewable energy producers above the market price for your guarantee, are also in the mix.

But feed-in tariffs are strong by some experts, however. "The idea is presented to the public is that we can do all this stuff without changes to people's invoices,", says Dieter helm, Professor of energy policy at the University of Oxford. "It is a core deception and there will be ungefalzt."

Write toGuy Chazan at guy.chazan@wsj.com

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