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Push for clear grandfathering rules as part of the government’s electricity market review

Energy UK has expressed its support for the Government’s consultation on the Review of Electricity Market Arrangements (REMA), highlighting the importance of transparency on existing investments and the need for robust carbon pricing to drive decarbonisation efforts.

Energy UK members believe that the principle of full grandfathering is crucial for existing assets such as Contracts for Difference (CfD), Capacity Market (CM) and Corporate Power Purchase Agreements (CPPA) where investment decisions have been based on domestic prices and lacked certainty about future reforms.

They call on the government to immediately clarify the grandfathering process to maintain investor confidence, especially in the case of potential zonal pricing arrangements.

Energy UK highlights the risks associated with uncertainty and emphasizes the importance of detailed consultation and analysis in decision-making and mitigating negative impacts on future investments.

Additionally, Energy UK highlights the importance of carbon pricing in electricity market reform, advocating for higher prices in the UK’s Emissions Trading Scheme (ETS) to encourage investment in low-carbon generation and reduce reliance on support mechanisms such as the capacity market manufacturing.

The industry association is calling on the government to support policies to increase the UK’s carbon price and to take action to link the UK ETS to the EU ETS to align economic incentives with decarbonisation goals.

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