Policy paper

Electricity Market Reform: Delivering UK Investment

Electricity Market Reform: Delivering UK Investment

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Electricity Market Reform: Delivering UK Investment

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Detail

The Government has three objectives for energy policy - to keep the lights on, to keep energy bills affordable, and to decarbonise energy generation. To achieve these, Government intends to reform the electricity market through legislation, having introduced the Energy Bill, to Parliament in November 2012.

Electricity Market Reform is the biggest change to the electricity market since privatisation and will transform the UK’s electricity sector. EMR will attract the £110 billion investment we need in this decade alone to replace our ageing energy infrastructure with a more diverse and low-carbon energy mix. This is a huge opportunity for growth and jobs within the UK, with EMR expected to support up to 250,000 jobs during this decade alone.

Government is proposing to legislate for Contracts for Difference (CfD), which will provide long term support for all forms of low-carbon generation – including Nuclear, Renewables and Carbon Capture and Storage. Such contracts will remove exposure to volatile wholesale electricity prices and provide a steady revenue stream for investors of all generation technologies, produce a more competitive market and therefore ensure electricity remains affordable.

To bring forward the billions of pounds of investment needed in new, low-carbon electricity generation and associated network infrastructure, Government is publishing key information on Contracts for Difference. This includes draft Strike Prices and key CfD terms which will form the basis for the final CfD contracts – therefore setting out the crucial information that developers require to make their investment decisions.

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