Electricity market reform (EMR)

The EMR programme was developed by the government to promote investment in secure forms of capacity and affordable low carbon energy generation.

The key mechanisms used to implement EMR were:

1. •

   the Contracts for Difference (CfD) regime, which is the subject matter of this Practice Note and takes the form of a contract (CfD contract) providing owners of new build low carbon generation projects a long term stable income in respect of the electricity they generate when their plant has been built and begins operating

2. •

   the Capacity Market (CM) regime, which provides a regular payment/retainer to reliable forms of electricity capacity (in the form of generation plant, electricity storage (such as batteries), reduction in electricity demand and international interconnection wires), in return for such capacity being available when the system needs that boost. See Practice Note: Capacity Market—key features

3. •

   the Carbon Price Floor, originally implemented to support the EU Emissions Trading System (EU ETS) by underpinning the price of carbon at a level that