A detailed draft of the contract the government will offer investors in low-carbon energy generation has been published.
The government is reforming the electricity market through the Energy Bill with the aim of securing the UK’s energy supply, decarbonising the economy and minimising costs to consumers.
A new support mechanism (long-term Contracts for Difference) is being introduced, alongside a Capacity Market, that together aims to help incentivise up to £110bn of private sector investment to 2020, to renew the UK’s energy infrastructure.
The draft terms of the contracts were published, alongside the methodology through which contracts will be allocated.
Construction minister Michael Fallon said: “No other sector is equal in scale to the British power market, in terms of the opportunity that it offers to investors, and the scale of the infrastructure challenge.
“The key contract terms have been published in detail to provide the energy sector and investment community with further certainty, so they can get on and invest.
“When compared to the existing system of support, the Renewables Obligation, this new support mechanism will make it cheaper to deliver low-carbon generation by around £5bn up to 2030.
“This will put the UK one step ahead in the global race to develop clean technologies, and will support up to 250,000 jobs across the energy sector.”
Industry will be able to provide feedback on the draft contract terms over the summer and these views will be considered before the government publishes final terms, which are expected in December 2013.