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The UK energy sector has got away without investing in new infrastructure as a result of the work completed prior to privatisation, according to the National Grid’s chief executive.
Speaking at the Economists UK Energy summit in London today, Steve Holliday said that the energy sector rested on the “massive investment” that was made prior to privatisation.
Holliday said: “The huge investment under what was essentially a centrally planned model and we leant on that massive investment.”
He added that the “huge fall in electricity demand” due the recession also allowed the sector to delay investment further.
Holliday said: “That just meant we could get away with it for a lot longer than anyone would have though without building new generation.”
He added that “the energy market today does not work” and while he would usually be in favour of limited interventions, the interventions being made under Electricity Market Reform (EMR) and the capacity mechanism “are the right interventions at the right time”.
In a wide-ranging presentation, Holliday said the new RIIO network price control had provided some certainty and “facilitated an enormous amount of investment in our energy infrastructure”, including the £25 billion investment programme being conducted by National Grid.
Basil Scarsella, chief executive at UK Power Networks, agreed that there is now more certainty in the sector, and said “the UK is again leading the world on energy policy given the changes that are taking place”.
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