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New DEFRA Regulations to Cost the NHS £300 Million

December 6, 2017

The Department of Environment, Food and Rural Affairs (Defra) is set to heap further pressure on already stretched NHS finances by preventing NHS Trusts from participating in energy demand response programmes as it implements the EU Medium Combustion Plant Dir

The Department of Environment, Food and Rural Affairs (Defra) is set to heap further pressure on already stretched NHS finances by preventing NHS Trusts from participating in energy demand response programmes as it implements the EU Medium Combustion Plant Directive.

 

New analysis shows that NHS finances will lose out on in excess of £27 million per year1 from 2019 once these proposed regulations are planned to take effect. This could fund over 3 million prescriptions, or around 5000 hip replacements2, and will place further pressure on NHS finances and service levels for patients up and down the country as a result of a completely unnecessary Government intervention.

 

Currently, NHS Trusts participate in energy demand response programmes using backup generators, which they require to maintain services in an emergency. The money they receive from these programmes enables their generators to run at no cost, ensuring a continuous energy supply at all times. Without an effective backup electricity source, hospitals could lose crucial power to life support machinery or operating theatres during a power outage.

 

However, under new proposals from Defra, NHS Trusts will be unable to provide these services without spending taxpayers money on prohibitively expensive emissions abatement equipment. This is clearly an unnecessary and unwelcome intervention at a time when public finances are squeezed, and when the NHS needs to be focusing on its core business of providing crucial medical care.

 

On a practical level, the demand response services provided by NHS Trusts ensure critical grid resilience and help to keep the lights on at times of system stress. Defra’s proposed approach will increase the emissions needed to provide these services, as NHS Trusts will continue to use their generators to ensure resilience. As backup generators would be excluded from providing ‘balancing services’, additional emissions will arise from the power stations that would be needed to make up the resulting shortfall. This will result in an estimated increase of over 5400 tonnes CO2e emissions3 over the course of an average year compared to the status quo.

 

Jonathan Ainley, Head of Public Affairs and UK Programme Manager at KiWi Power said: “The last thing the country needs is for the Government to place additional strain on the NHS budget. The proposed policy will create a funding shortfall, requiring NHS Trusts to divert much-needed money away from front-line services towards generator maintenance, which is surely an outcome to be avoided. I urge Defra to think again about shutting the NHS out of a means of generating additional income from their existing assets by providing critical services to the National Grid.”

(1) Calculated using KiWi Power earning statements from clients across our NHS portfolio, and applied across National Grid’s estimate for the potential demand response capacity in the NHS, as quoted in http://www.telegraph.co.uk/business/2016/06/19/national-grid-recruits-nhs-hospitals-to-help-keep-the-lights-on/
(2) Figures taken from the NHS National Tariff
(3) Emissions values taken from National Grid STOR Carbon Intensity Report, assuming 30 run hours per year with total requirement shortfall of 300MW