I blogged on 4 July about the Government’s proposals for Electricity Market Reform. It sounds, and is, quite technical, but it’s also an important part of stimulating new investment in the UK’s energy sector and meeting our climate change targets.
Part of the deal to attract investment is to have formal agreements which guarantee the price to be paid for electricity produced by various more environmentally friendly means, including on-shore and off-shore wind, solar, etc.
The outline of these deals was published in July when the Government announced the proposed prices to be paid for electricity.
This week a detailed draft of the contract that Government will offer investors in low-carbon energy generation was published, providing further certainty to prospective developers and investors.
The aim of reforming the electricity market is to keep the lights on, decarbonise the economy and minimise costs to consumers, while keeping the sector attractive for investors.
New long term price agreements, the so-called Contracts for Difference, are being introduced to help incentivise up to £110 billion of private sector investment up to 2020, to renew the UK’s energy infrastructure.
Contracts for Difference are vital to give investors the confidence they need to pay the up-front costs of major new energy infrastructure projects.
Today, the draft terms of the contracts were published, alongside the methodology through which contracts will be allocated. The documents and full press release are available on GOV.UK. For more information you can contact Daniel.Nutley2@fco.gov.uk, at the Embassy.