The voice of the energy industry

The EMR success story can go further in next chapter

As the government reviews the Electricity Market Reform (EMR) programme, and its success in delivering low carbon, affordable energy, Energy UK - which represents over 100 suppliers, generators and other participants in the sector - is setting out how EMR can bring even greater benefits for consumers and the UK economy in future.  

In its vision paper published today, Energy UK emphasises its continuing support for the the programme’s two major elements - the Contracts for Difference (CfD) and Capacity Market auctions - but makes a number of recommendations to ensure they remain fit for purpose in future by providing a level playing field for all participants and technologies and enabling investment at lowest cost.  
    
The vision paper makes a number of recommendations including that:

  • There should be a revenue stabilisation CfD to reflect substantial cost reductions in a number of low carbon technologies;
  • There needs to be greater clarity on timing and rules for future CfD auctions in order to help generators develop supply chains and plan more effectively for future investment;
  • The Capacity Market should allow renewables to participate in future and should also look to see how innovative new models such as hybrid (those with multiple technologies) and aggregated sites can take part; and
  • The Capacity Market rules and governance, including penalties and fees, should be reviewed to ensure they remain fit for purpose.

By drastically reducing costs and incentivising billions of pounds of investments, the EMR policy has driven growth and established the UK as an international leader in the technologies involved. The latest CfD auction in September 2017 saw the cost of offshore wind projects nearly halved whilst the latest Capacity Market auction resulted in the lowest clearing price ever.   
         
Lawrence Slade, chief executive of Energy UK, said:

“EMR has been a success story and shows that with the right framework and incentives, low carbon energy can be delivered at an ever-reducing cost to customers, whilst ensuring we keep the lights on.

“By stimulating billions of pounds of investment and innovation, it has helped the UK become a world leader in green technology - creating jobs and economic growth across the country. It has also benefited the environment by helping the energy sector to continue to reduce emissions, which have halved since 1990, to a point where low carbon sources now frequently account for the majority of total generation.     
 
“However it is essential that we not only keep up the pace of decarbonisation in future but go further and faster. That’s why we are making recommendations which can make EMR deliver even more effectively in future.”  

ENDS

Notes to Editors

  • You can find the vision paper on Energy UK's website.
  • EMR is a government programme which was set up to incentivise investment in low-carbon electricity, ensure security of supply and improve affordability for consumers. The Energy Act 2013 introduced a number of mechanisms to help achieve this including the Capacity Market (to help ensure security of supply) and the Contract for Difference (CfD) auction (to ensure investment in low carbon generation) – both competitive processes which have helped drive down costs to the consumer.   
  • The vision paper follows last week’s publication of a National Audit Office report into the latest CfD auction and a report from the Environmental Audit Committee highlighting the need to increase investment in clean energy.  

 

 

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