Electricity Market Reform (EMR)

Electricity Market Reform is a package of reforms for the electricity sector of UK introduced in April 2013.

The main four measures regulated and introduced by the EMR are:

• Contracts-for-Difference (CfD) for renewable electricity generators designed to gradually replace Renewable Obligation (RO) system. CfD provide a premium payment for renewable electricity paid on top of the wholesale market price to reach the agreed payment level (strike price). If the market price is higher than the agreed “strike price”, renewable generator must pay back the difference. CfD is accompanied by capacity auctions structure.
• Capacity auctions set a market for future capacity.
• Emission Performance Standard (EPS) is an emission cap for new power plants and banned the construction of non-CCS coal plants.
• Carbon Price Floor (CPF) designed to be gradually increased (starting from 2103) and augment EU carbon price. The CPF was set on the level of GBP 15.70 per CO2 tonne in 2013 and to be increased to GBP 30 per CO2 tonne by 2020. 

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