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Jones Lang LaSalle House View – Electricity Market Reform Energy Bill

London, 30th November 2012 – The Coalition has this week published the key elements of its flagship Electricity Market Reform (EMR) Energy Bill. These reforms represent a massive overhaul of the electricity market that will establish a new legislative framework designed to deliver the reported £110bn of investment needed to secure an affordable and low carbon electricity system.

The highlights of the Bill from a renewable energy investor’s perspective include: the introduction of a new low carbon support mechanism in the form of Feed-in Tariffs with Contracts for Difference (CfD FiTs), a significant increase in the Levy Control Framework (LCF) budget to £7.6bn, the establishment of a new company that will act as a single counterparty to the CfDs, and the provision of transitional arrangements that will ensure continued investment in our energy infrastructure while the electricity market reforms are implemented.
Jones Lang LaSalle’s head of Renewable Energy Capital, Dane Wilkins, said: “The measures proposed by the Government provide investors with much needed clarity on the nature of the proposed  support regime, which in our view will help create a robust support framework, reduce uncertainty and put downward pressure on the cost of capital in the renewables space. However, the devil is in the detail and it will be important to understand exactly how the proposed measures will work in practise to ensure they are investment grade.”
Dane Wilkins added: “From our own recent activity in the marketplace we have found there is significant investor appetite for renewables projects in the UK that are due to become operational prior to the next RO banding review in April 2014 and even up to the close of the RO in 2017. The publication of the Energy Bill is proof that the government is committed at the highest levels to deliver on its energy policy goals. The Bill will play a big role in attracting new capital into the UK renewables sector and we envisage  many of Jones Lang LaSalle’s traditional property investors taking  a closer look at potential opportunities in this field – we’ve already seen certain family offices and institutional investors actively considering making their first investments in the sector.”
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