We recognise the impact that the current energy price shock is having on consumers and businesses and understand the concerns this is raising. We agree with the government that investing in renewables is the best way to financially decouple electricity prices from gas. While gas typically sets electricity prices, this is becoming less frequent as the market share of low-cost renewables supported by Contracts for Difference increases.
Today, the Government has announced measures to accelerate this decoupling. RWE welcomes the intention to introduce voluntary Contracts for Difference (CfDs) for legacy and older renewable projects as a positive step forward. Moving Renewables Obligation generators onto more stable two-way, fixed-price CfDs would help protect consumers from future price spikes and has the potential to reduce the overall cost of renewable support schemes. A voluntary CfD is a tried-and-tested market instrument understood by investors, and subject to clear and simple design principles, is both deliverable and investable.
There is a strong enough incentive for merchant renewable operators to participate in a voluntary CfD auction without the need for changes to the Electricity Generators Levy.
We look forward to working closely with the government in the coming months to ensure the effective implementation of these proposals.