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DECC consults on Electricity Market Reform implementation

A consultation on proposals for the implementation of the Electricity Market Reform (EMR) has been launched by the Department of Energy and Climate Change (DECC).

The EMR is part of the Energy Bill, which DECC expects to receive Royal Assent by the end of the year.

DECC is seeking views on detailed Government proposals for implementing a policy framework for Contracts for Difference (CfDs) and a Capacity Market.

CfDs are agreements to pay the difference between the strike price – a price for electricity reflecting the cost of investing in a particular low carbon technology – and the reference price, which is a measure of the average market price for electricity on the grid at a particular time.

CfDs are taking over Renewable Obligation (ROs) subsidies in 2017.

The draft EMR delivery plan, published this summer, indicated that the Government would offer a flat strike price for “good quality” dedicated biomass Combined Heat and Power (CHP), but not for new-build, electricity-only biomass facilities.

The Capacity Market, a supplement to the electricity market, is designed to ensure the future security of electricity supplies, said DECC.

The consultation closes on 24 December 2013. DECC expects to publish its response to the consultation in spring 2014.

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