Reform in haste, repent at leisure: squaring electricity market reform with investor confidence

The review of electricity market arrangements (REMA) signalled by the energy security strategy could impact wholesale & balancing markets, & there could be a need to examine the capacity market rules & CFD contracts. It is too early to know what options will ultimately be adopted or when changes would be made. We know that in summer some options will be surfaced but we are talking years most likely for decisions & implementation. It does seem likely that locational pricing will be looked at, noting that these models have been made to work in the US and elsewhere, & that the idea has gained momentum in GB. Others are looking at splitting markets between low carbon & dispatchable generation, &/or broadening out the role of CfDs. The impacts on different projects from change depends on the options taken forward, but there could be some complex & project specific outcomes in practice that the theory doesn’t capture.

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