Wheels in motion to let big energy users off EMR costs

The Government has opened a consultation on how to let big energy users off the hook when it comes to paying for parts of the electricity market reform. In a […]

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By Vicky Ellis

The Government has opened a consultation on how to let big energy users off the hook when it comes to paying for parts of the electricity market reform.

In a statement today DECC and BIS said the measure is to stop CfD costs posing “significant risk to UK competitiveness”.

The departments are working out how to exempt energy intensive industries from the costs of Contracts for Difference (CfDs), the payment mechanism meant to support investment in low carbon electricity generation.

Fergus McReynolds of the trade group EEF which represents manufacturers said the consultation is “promising”.

He told ELN: “This is a consultation on the last, fourth element of the Energy Intensive Industries (EII) package… The important thing is whether it delivers on that package. It’s quite significant.”

The key questions are which industries will be let off the hook and how much they will be exempted. Steelmakers, paper and pulp factories and some chemical producers will be hoping for support, he explained.

Some options being looked at for exemption are “tapered” but the key thing is that the proposals will last for the whole lifetime of the CfD unlike other get-out clauses for schemes like the EU ETS and carbon price support.

The exemption would come into force at the same time as the Electricity Market Reform (EMR) kicks in.