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New Legislation is coming into force which will introduce new costs in to the electricity market, through a package of measures known as Electricity Market Reform (EMR).

EMR is a suite of Government policies designed to deliver incentives for the investment required in the UK’s energy infrastructure.

The key mechanisms of EMR will create a system of support for lower carbon power generation (e.g. wind farms) as well as providing security for those who ‘keep the lights on’ by keeping their plants available as back-up for times when renewable sources are unavailable.

Through the EMR, two key mechanisms will be introduced:

  • Feed-in Tariffs with Contracts for Difference (CfD) – this will pay generators a fixed price for low carbon generation, providing greater certainty to those investing in new technologies.

 

  • A Capacity Market (CM) – a capacity market has been set up to make sure that supply will be available when it’s needed the most. It provides incentives for developers and owners of generating capacity (e.g. power plants) to make their capacity available. Capacity providers are paid on a kilowatt per year basis for the capacity that they can make available.

 

From April 2015 Suppliers will start to incur EMR costs as part of their Customer supply activities and they may therefore look to pass these costs on to those Corporate Customers that are in ‘Fixed Price’ contracts at that time. The industry anticipates that the costs associated with the introduction of these two price mechanisms will initially be low. The expectation is that the total charge in 2015 will be circa 0.1p/kWh.

We can help you understand the impact this will have on your business.  Read here for more about our Utilities Brokering Service

Contact us to discuss your requirements. 

Company Reg: 3259687. Reg Address: FPA Consulting Ltd, 1 St Andrew's House, Vernon Gate, Derby, DE1 1UJ. First Energy Solutions and First Quality Solutions are divisions of FPA Consulting Limited. 01332 604 321

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