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DECC Press Release

June 28, 2013

By Paul Homewood




Yesterday’s press release from DECC covers a few areas, but the following are noteworthy:-


  • The first auction for the Capacity Market, or CM, will be held next year, and to cover the 2018-2022 period.
  • Participants in the CM (who could include existing generators and investors in new plant such as gas or demand-side response), will bid to provide the total amount of electricity capacity that is forecast to be required through an auction, and if successful would receive a steady payment in the year they agree to make capacity available. (This is so that gas fired generators are paid to keep their plants on standby, when the wind is blowing).
  • The costs of capacity agreements will be met by suppliers, (and therefore passed onto consumers.)
  • Ofgem today updated their assessment of supply margins in the middle of this decade, anticipating that the buffer between peak demand and supply could be lower than previously expected. This is in part due to the low price of coal that has led coal-fired power stations in the UK to operate more often, whilst gas has become uncompetitive, leading plants to close. This surge in the use of coal has also brought forward the point at which the dirtiest plants are required to close in compliance with environmental standards.
  • Also announced today are details, earlier than expected, of the proposed strike prices that will be available from 2014 – 2019 for renewable electricity including onshore and offshore wind, tidal, wave, biomass conversion and large solar projects. This support comes from within the £7.6 billion Levy Control Framework, as previously announced.
  • These strike prices are effectively guaranteed prices, and will replace the current Renewables Obligation subsidy.
  • These prices are broadly comparable to the support levels available under the Renewables Obligation, with a number of adjustments to account for the benefits of CfDs.
  • As an example, onshore wind, on 2012 prices, will be paid £100/MWh, about twice the current market rate. Offshore wind will receive £155/MWh.
  • Levy Control Framework – There will be a cap set to limit the costs passed on to consumers through the long-term contracts. This cap (the Levy Control Framework) covers all of DECC’s support mechanisms for low-carbon generation and, as announced in November 2012, will be £7.6 billion (in 2012 prices) in 2020/21. This works out at about £292 per household.

The full press release is here.

One Comment
  1. Joe Public permalink
    June 28, 2013 7:42 pm

    That series of changes appears so complex, I can fully understand why DECC needs to increase its staffing levels by 250,000 to administer it all.

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