The government will allow energy firms to charge up to £7.6bn per year to fund renewable and low carbon energy projects as final details of the upcoming Energy Bill were agreed last week.
The extra funds are a significant increase on the £2.35bn that was expected to be raised through the Levy Control Framework - the government mechanism for funding renewable energy and nuclear power plants. Energy secretary Ed Davey said the announcement was a “durable agreement” which allows companies to invest and support jobs.
A single government owned counterparty will also be formed to support the new long term feed-in tariffs contracts for difference - which offer a minimum price for electricity - that will support low carbon energy projects such as new nuclear.
Energy companies and investors had expressed fears that the new contracts for difference would not be backed by the state. (NCE 9-16 August).