Strike prices released early — does this provide more certainty for energy investors?
One of the key parts of the government’s Electricity Market Reform (EMR) proposals is contracts for difference (CfDs), which will replace the renewables obligation (RO) as the key support mechanism for low-carbon electricity generation. Under CfDs, a generator will be paid the difference between a strike price and a reference market price (unless the reference market price exceeds the strike price, in which case the generator will pay that difference back).
Clearly, the level at which the strike prices are set is one of the main pieces of information for investors and developers as it very much underpins the economics of any low-carbon project. The government has published the draft strike prices for renewables technologies, which reduce over time as technology costs come down. The government has set the strike prices to be consistent with the RO levels of support (although adjusted down as the CfD arguably protects the investor against additional risks).
It is worth noting that there are 14 published strike prices, in contrast with the current 35 RO support bands for renewables. In some cases, DECC is offering one strike price to cover two or more support bands under the RO, as it is moving away from having more than one support level for a single technology. In addition, DECC is not offering strike prices for a number of RO technologies at the present time, for example due to sustainability reasons…
If you are registered and logged in to the site, click on the link below to read the rest of the Walker Morris briefing. If not, please register or sign in with your details below.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.
News from Walker Morris
News from The Lawyer
Briefings from Walker Morris
Nnew advice and guidance has been published for vloggers on how to ensure they do not unwittingly contravene consumer protection legislation or the CAP Code.
Also: defining ‘building’ in planning policy; and more
Analysis from The Lawyer
Which firms are cutting it in this era of slimline rosters, and who are the GC new brooms making clean sweeps? The Lawyer can reveal all
The law school war shows no signs of ending. But we have, perhaps, reached the end of the beginning.