The Low Carbon Contracts Company (LCCC) and the Electricity Settlements Company (ESC) sit at the heart of the delivery of the UK’s goals for secure, affordable and sustainable electricity.
These two private limited companies, wholly owned by the Secretary of State for Business, Energy and Industrial Strategy (BEIS) formerly known as Department for Energy and Climate Change (DECC), were created to deliver key elements of the government’s Electricity Market Reform Programme. As government-owned companies, LCCC and ESC are governed by Framework Documents setting out the shareholder relationship and their Guiding Principle.
LCCC was established to be the counterpart to Contracts for Difference (CFDs), a new incentive designed by Government to bring forward the investment needed to sustainably deliver the UK’s goals for renewable and other low carbon electricity. Its mission is to build confidence in electricity market reform through effective commercial delivery and continuous improvement.
LCCC’s primary role is to manage CFDs with low carbon generators throughout their lifetime, which involves management of the contracts as well as the Supplier Obligation Levy that funds CFD payments. Critical to these functions is power price forecasting and settlement activities. In all of its operations, LCCC is led by its guiding principle to “maintain investor confidence in the CFD scheme and minimise costs to consumers”. LCCC also runs Capacity Market settlement operations on behalf of the ESC.
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ESC’s role is to oversee the settlement of the Capacity Market to ensure that regular payments are made to capacity providers who have agreed to provide capacity at times of system stress. These capacity arrangements help to keep the lights on across Great Britain.
For more information about our operations please see the Low Carbon Contracts Company Annual Report and the Electricity Settlements Company Annual Report. We have also recently published the ESC Annual Performance Report.