Energy UK has called on energy department BEIS to introduce a revenue stabilisation Contract for Difference (CfD) as part of its five-year review of Electricity Market Reform (EMR).
The trade association said a so-called subsidy-free CfD is necessary despite falling costs of onshore wind and other established technologies due to wholesale price fluctuations caused by fossil fuel price volatility.
“The provision of such contracts will ensure consumers are accessing the cheapest new electricity sources needed,” it said in a vision paper.
Energy UK also called for greater clarity on timing and rules for future CfD auctions in order to help generators develop supply chains and plan more effectively for future investment.
“A timetable for future CfD auctions should be established out to at least 2025 in line with the funds committed,” it said.
Under the 2013 Energy Act, BEIS is required to report to parliament by the end of 2018 detailing whether the goals of EMR have been met.
BEIS confirmed in March its intention to carry out a formal review of the EMR-derived capacity market later this year.
Energy UK said the capacity market should allow renewables to participate in future and should also look to see how innovative new models such as hybrid and aggregated sites can take part.
Image: Little Cheyne Court onshore wind farm (Innogy UK Renewables)
Energy UK eyes subsidy-free CfD
By EBS