Independent renewable generators will be able to sell power at a £25/MWh discount if other arrangements fall through, under government proposals published on Tuesday.
Suppliers including some of the Big Six will be expected to offer backstop power purchase agreements (PPAs) to generators who are unable to secure any commercial deals as a short term safety net.
Ed Davey the Energy Secretary said the “offtaker of last resort” mechanism would provide more confidence in the PPA market and create competition.
The Department of Energy and Climate Change (Decc) is still to decide the level of discount to be applied, but they are ‘minded; to fix it between £20 & £30/MWh. This should be the correct balance between the risk of cost to consumers and revenue security for generators, the consultation document said.
Originally the Backstop PPA’s were only offered to the wind power generators, but has now been spread across to all renewable generators.