Contracts for Difference (CfDs) are designed to ensure sufficient investment comes forward in time to replace ageing UK electricity generating plant – due to close from 2016 onwards – with new low carbon plant, thus ensuring continued security of supply for the UK.
Now UK Energy Minister Ed Davey has announced details of contingency funding for setting up institutional frameworks for the delivery of this electricity market reform.
The Energy Bill will make provision for transitional arrangements to enable developers to take investment decisions, where required, ahead of full implementation of electricity market reform.
Davey explained: “The Department (DECC) needs to engage external advisers before the Bill receives Royal Assent to support the negotiation of any such arrangements to ensure they represent value for money for consumers.
“Accordingly, Parliamentary approval for additional resources of just over £4 million for this new service will be sought in a Supplementary Estimate for the Department of Energy and Climate Change.”
Andrew Wright, Interim Chief Executive, OFGEM (Office of Gas and Electricity Markets) commented: “It is now more important than ever that retail energy markets work effectively”.