The Electricity Market Reform (EMR) was introduced by the UK government as a potential solution to the nation’s core energy problems which include lowering energy costs, improving supply security and reducing carbon emissions. It offers organisations incentives to help generate £110bn which will be used to upgrade and improve the UK’s electricity infrastructure. These upgrades will help improve the transportation of renewable energy across the national grid and reduce the UK’s reliance on fossil fuels and foreign imports.

The reform will also see the introduction of Contract for Difference (CFD) charges which will help incentivise renewable energy generation. Low carbon energy generators will be offered a compulsory 15 year contract which will see them receive a fixed rate for the electricity they supply; should the wholesale price exceed this rate the generator will then be required to pay the difference. Consumers will also receive additional security against supply shortages with the implementation of the capacity market which will provide generators with a competitive auction. This will be achieved with the use of peak demand forecasts devised by the National Grid which will provide successful bidders with a predictable revenue stream for the capacity they supply.

In order to limit the impact the EMR has on your business it is important to manage your energy consumption effectively. Turning off lights and appliances when not in use is an easy and effective method of reducing your electricity consumption but larger savings can be achieved through the procurement of the correct energy contract or the installation of a smart meter. 

What next?

For a more in-depth look at the Energy Market Reform we have provided a briefing document which can be downloaded by clicking on the button below.

Crown Commercial Services Brochure