Government reforms to stimulate low carbon energy investment and keep the lights on have passed into law.
The secretary of state has confirmed that the government’s delivery partners for the reformed market - National Grid, the Low Carbon Contracts Company, and the Electricity Settlements Company - have been given powers to go ahead and implement the reforms.
The first Capacity Market auction will be held in December 2014 for the winter of 2018/19, helping to ensure the lights don’t go out when demand for electricity is high.
The first allocation of Contracts for Difference is also said to be on track to be held in autumn 2014, with government publishing the final Contract for Difference and Allocation Round notice in the coming weeks.
The announcement comes after another vote of confidence, when the European Commission granted State Aid approval for the Capacity Market and Contracts for Difference on 23 July 2014.
DECC claims the new system is designed to bring more competition and encourage private sector investment in electricity generation, by providing long-term Contracts for Difference, which reduce risk for investors; and by introducing a Capacity Market to ensure security of supply.
Household electricity bills are estimated to be 6% (£41) lower on average every year up to 2030 than reducing emissions through existing policies.