Will markets deliver low carbon power generation ?

This paper questions whether UK competitive electricity markets, as currently configured, will deliver the low carbon power sector that is a necessary condition of meeting ambitious UK CO2 emission targets. It analyses their historical development within an essentially fossil based system, and potential weaknesses in relation to low carbon investments. These include concerns over operational, capacity investment and retail tariff issues, and over carbon price signals emanating from the EU ETS. It concludes that careful monitoring is needed to ensure that market structures reflect changing technologies both in generation and consumption, and do not inhibit essential low carbon investment.