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Electricity Market Reform lacks depth

Posted on by Rebecca

Electricity Market Reform lacks depth

Published at the end of 2012 as part of the Energy Bill, the government’s plans to reform the electricity market (known as EMR) have now had a few months to be digested by the industry. The resulting consensus is that the plan is positive but it lacks meat and there are a number of questions still outstanding to give the industry real confidence moving forward.

As the Bill reaches report stage this week, it is interesting to see how campaigning and feedback – especially around the need for decarbonisation targets – has been incorporated into this latest stage.

There are three main areas of the EMR: Contracts for Difference Feed in Tariffs (CfD FIT) to deliver a stable and predictable revenue stream; capacity mechanism to prevent the lights going out come 2015/16; and decarbonisation targets (or lack of) – this latter area is the one where industry and commentators want more specific action.

Overall, the EMR all looks fairly predictable, but there area a number of ‘…to be continueds’ – particularly around the fundamentals of strike price and reference price. Along with our clients in the energy sector, we will be watching the ongoing saga of the EMR with interest and expectation.

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