Electricity Market Reform (EMR) is the major change to the UK’s energy policy which aims to maintain security of supply while keeping energy bills affordable and increasing low-carbon generation.
EMR includes the Carbon Price Floor which has already come into effect and acts to set a minimum price of carbon in the UK. The Emission Performance Standard sets the annual limit of carbon emissions new fossil fuel power stations are allowed to emit.
It also includes the two support schemes known as the Capacity Market and Contracts for Difference (CfD) to incentivise development of new projects.
Impact on customer bills
The cost of implementing the CfD and Capacity Market schemes plus the cost of paying generators will be paid by energy users through their bills.
For more information about EMR charges, please contact your Account Manager. Watch our non-commodity charges quarterly webinars to keep up to date with forecasts for future EMR costs.
Opportunities for electricity consumers
Consumers are also able to participate in the Capacity Market by providing Demand Side Response (DSR) capacity by load-shifting or curtailing consumption. Businesses can receive payments for participating in the scheme and also reduce their energy bills by using less in peak times.
The next opportunity for DSR is the Transitional Arrangements auction in March 2017 for delivery in winter 2017/18. For more information about how to get involved, read about our SmartDSR service here.
New schemes for generators
EMR also includes the two support schemes known as the Capacity Market and Contracts for Difference (CfD) to incentivise development of new projects. Register for our embedded benefits quarterly webinars to keep up to date with forecasts for these schemes.
Under the CfD scheme, low carbon generators over 5MW can bid into an auction to secure a contract which guarantees them a price for their power up to a maximum £/MWh strike price per technology set by Government. The first CfD auction was completed in February 2015 and 27 projects were awarded contracts. Subscribe to our weekly newsletter for the latest information on CfD auctions.
The Capacity Market scheme pays generators for providing capacity to the grid in times of peak demand. Generators and Demand Side Response (DSR) providers bid into an auction for Capacity Agreements which provides a stable financial return in return for a commitment to deliver energy when required. The next auctions will take place in early 2017 - subscribe to our weekly newsletter for the latest information on the Capacity Market auctions.
If you are interested in either scheme, contact us to find out how we can support you.