The policy for the depoyment of renewable energy in electricity has been implemented with the release of tranches (a specified amount of power in MW) of power purchase agreements guaranteeing, through the Renewable Energy Feed-In Tarriff or REFIT scheme, minimum prices for electricity from renewable energy sources such as wind, biomass, CHP and hydro.
In recent times, the impact of the EU 2020 policy on the affordability of energy in Europe, in comparison to the United States and our other trading partners, has put a new focus on cost-effectiveness. If cost is a key factor in how we make our decisions, at the moment fossil fuels are often cheaper than alternatives. However, fossil fuels have external costs in the form of greenhouse gas emissions which are causing climate change along with other detrimental health and environmental effects from nitrous oxides and particulates.
In addition, the supply of fossil fuels is not always guaranteed: We imported over 85% of our oil and gas in 2014 and these supplies could be interrupted by international events. Past oil crises that led to disruptions to our oil supply and economically damaging spikes in prices brought about a resurgence of coal use, but also gave a new impetus to energy efficiency.
More recently the high fuel conversion efficiency, lower greenhouse gas emissions, and new gas-fired combined cycle technology led the move to natural gas for electricity generation. This was greatly assisted by the speed with which the new Combined Cycle Gas Turbine (CCGT) plants could be financed and built.
The introduction of emissions trading for the power sector at a European level in the form of the EU- ETS has left the choice of energy for power generation in the hands of the market. Government regulation and policy still influences the choice of fuels through market rules and price support for renewables and peat. Electricity demand, the price of carbon emission permits, and the ability of new plant with new technology to compete taking account of the fuel price outlook are among the factors weighed up by investors in making their power generation technology and investment choices.