Electricity: Prices
The question
To ask the Secretary of State for Energy Security and Net Zero, what steps his Department is taking to ensure the pricing mechanism for electricity reflects the lower generation costs of renewables.
Answered by Michael Shanks
Unabated gas generation is increasingly being displaced on the system by the rollout of renewables, setting the marginal price less frequently. The most effective mechanism for driving renewable generation is a Contract for Difference-type scheme that includes key features such as competitive auctions to minimise costs to consumers, alongside a mechanism wherein generators pay back when wholesale prices are high. The Government is committed to retaining this type of scheme and as part of the Review of Electricity Market Arrangements programme, is also considering what further steps can be taken to protect consumers from the impacts of potential price spikes.
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