Ministers urged not to delay next EMR allocations

The Department for Energy and Climate Change’s (DECC) commercial director has urged the next government not to waste time in deciding its next funding allocations for Electricity Market Reform (EMR).

Hugo Robson was speaking at an infrastructure conference ahead of this week’s announcement of the winners of the auction for £260m in contracts for less-established power schemes, such as offshore wind and biomass, and a further £65m for more established onshore wind and solar projects, all with 15-year terms.

Robson told the event, organised by KPMG, that DECC now had a framework in place that it was happy with and that ministers’ focus should be on the budgets for the next contract for difference auctions, which aim to provide certainty for investors by fixing prices for power generated.

“The key thing for the new government coming in in May or June, or whenever it is, is to look at the electricity market and not concentrate too much on the management side but move quickly to decide the next allocations,” Robson said.

The budgets for next year’s auction are nominally due to be confirmed this autumn, and £50m has already been “indicated” for established technologies, such as onshore wind and solar power. DECC said last month that renewables and carbon-capture contracts for difference were planned to rise to more than £1bn in 2020-21.

However, Robson told the KPMG event that it was offshore wind that would be “absolutely critical” to EMR.

This week’s auction winners are part of a wider programme to reduce the market dependence on fossil fuels in the UK, which Robson said would require “over £100bn of capital investment” during the current decade.

In April last year DECC announced a first round of eight EMR projects, which included five offshore wind schemes and three biomass projects.

Three of the offshore wind schemes were awarded to Dong Energy Wind Power, while one went to Beatrice Offshore Windfarm, which is a joint venture between SSE Renewables, Repsol Nuevas Energias UK, and Copenhagen Infrastructure Partners. The fifth offshore scheme went to Dudgeon Offshore Wind, which belongs to Norway’s Statoil and Statkraft.

The biomass schemes went to MGT Power, Lynemouth Power, and Drax.