UK energy market reform to increase investment

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The government has published their Electricity Market Reform Delivery Plan, a plan which is set to open up £110billion of investment in the electricity sector and producing cleaner energy.

The measures detailed in the plan are required to improve the security of the UK’s electricity supply by 2020.  This is now possible since the Energy Bill received Royal Assent, thereby providing some certainty to investors in the energy infrastructure.  The Electricity Market Reform package will reward renewable and nuclear energy with guaranteed electricity prices over a set period encouraging power plant developers to opt for low-carbon forms of energy generation.

Conventional capacity will also see an investment through a Capacity Market whereby participants will receive payments for producing extra energy when capacity is tight. This should drive investment in generation while keeping costs to a minimum.

Draft investment contracts (for-runners to full Contracts for Difference) have been forwarded to the sixteen major generation projects that have progressed to the next stage of the Final Investment Decision Enabling for Renewables process, with contracts expected to be awarded in Spring this year. Out of the sixteen Final Investment Decision projects, ten have been classed as ‘affordable’ based on their phase 2 provisional score and project information with final affordability assessments to be confirmed.

The table below shows the ten projects classified as ‘affordable’ and awaiting final confirmation.

Number Qualifying Project Applicant Technology
1 Beinn Mhor Wind Farm Beinn Mhor Power Limited Onshore wind
2 Burbo Bank Offshore Wind Farm Dong Energy Wind Power A/S Offshore wind
3 Drax 2nd Conversion Unit
(Unit #3)
Drax Power Limited Biomass conversion
4 Drax 3rd Conversion Unit
(Unit #1)
Drax Power Limited Biomass conversion
5 Dudgeon Offshore Wind Farm Dudgeon Offshore Wind Limited Offshore wind
6 Heckington Fen Ecotricity Group Limited Onshore wind
7 Hornsea Offshore Wind Farm Dong Energy Wind Power A/S Offshore wind
8 Lynemouth Power Station Lynemouth Power Limited Biomass conversion
9 Teesside Renewable Energy MGT Power Limited Dedicated Biomass with CHP
10 Walney Extension Offshore Wind Farm Dong Energy Wind Power A/S Offshore wind

For more information, help or advice please contact Andrew Davison on 0191 211 7950.