Explore the Challenges

    Which challenges are the schemes trying to address?

    The UK needs a secure low carbon electricity system at a cost-effective price for consumers. To achieve this, the CfD and CM schemes are designed to tackle three market challenges.

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    1. Decarbonisation

    There is an urgent need to decarbonise our economy. In the electricity sector this means we need to change from fossil fuel-based power stations (like coal and gas) to clean low-carbon generation (such as wind). In June 2019 Parliament set a new target to achieve a ‘Net Zero’ target by 2050, and in December 2019 the target for offshore wind was raised from 30GW to 40GW by 2030.

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    2. Replacing old power stations

    Many of the UK’s coal, nuclear and gas power stations are reaching the end of their life span. Their closure will create a shortfall in power generation, sometimes referred as a Capacity Gap. The UK will need new power stations to replace them.  Electricity users will also need to find ways to consume less electricity.

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    3. Investment challenge

    Billions of pounds of investment will be needed over the next three decades to replace the old power stations with low carbon generation. In the 2020s alone around £50bn is needed just to build the offshore wind farms needed. It’s vital that this is obtained at the lowest possible cost.