DESNZ has revealed its plans to reform electricity pricing, including long‑term fixed‑price contracts for renewables.

There will be an immediate action to tax profits through the Electricity Generator Levy by raising the rate from 45 per cent to 55 per cent, and new measures to ‘break the link’ to reduce the impact of volatile gas prices on the price of electricity with a voluntary long-term fixed contracts offered to existing low-carbon generators not on fixed‑price contracts, covering around a third of Britain’s power supply.

Energy Secretary Ed Miliband said: “As we face the second fossil fuel shock in less than five years, the lesson for our country is clear: The era of fossil fuel security is over, and the era of clean energy security must come of age. That’s why we’re doubling down on clean power, to give our country energy security and bring down bills for good.”

Fixed contracts, known as Wholesale Contracts for Difference will be voluntarily introduced later this year, with an intention to run an allocation process in 2027. Wholesale Contract for Difference (WCfD) would offer existing eligible generators, who aren’t already contracted under a CfD, the option to accept a fixed price for the electricity they generate.

A WCfD would see eligible generators give up their current forward wholesale revenues in exchange for a fixed power price achieved via a CfD. Under this proposal it is envisaged that generators accredited under the Renewables Obligation (RO) would continue to receive support via the RO in the way they do currently, with only their wholesale revenues being exchanged for a fixed price CfD.

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