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47 min ago 2 min read
The UK government is to raise the electricity generator levy by 10% to 55% and plans long term fixed price contracts for renewables to reduce global energy risks.
The government said the moves are designed to ‘break the link’ between gas and electricity prices. A significant share of renewable generation – about 30% of Britain’s power supply – is exposed to wholesale prices set by gas.
The levy means ‘extraordinary revenues’ generated when gas prices spike can be made available to support businesses and households.
Fixed contracts, known as ‘wholesale contracts for difference (CfD)’, will be introduced voluntary later this year, with an intention to run an allocation process in 2027.
It 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
UK wholesale natural gas prices rose around 75% between late February and 23 March. The International Monetary Fund forecasts that the UK will be the most affected by the energy shock among developed economies.
The disruption in energy supplies from the Middle East has underlined the need for the UK , according to think tank The Institute for Economic Affairs.
Prime Minister Keir Starmer said, “We need to get off the fossil fuel rollercoaster – this will make energy bills more stable … when global gas prices spike, people here shouldn’t be picking up the tab.”
Energy Secretary Ed Miliband added, “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.”
The government will also publish further details on transitional energy certificates to provide greater clarity for industry.
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