The U.K. government will require electricity suppliers to buy power from independent renewable generators, an effort to help them compete in an electricity market dominated by SSE Plc, Centrica Plc and EON SE.
Smaller producers without strong electricity sales departments struggle to enter the power market, the Department of Energy and Climate Change said today in a statement. The government said it intends to create a system to ensure there’s always a buyer to sign contracts for their power.
The move is aimed at reducing the dominance of the so-called big six energy companies including EDF Energy Plc, RWE Npower Plc and Scottish Power Ltd., which supply about 95 percent of the market. Britain is seeking to open up the system to smaller companies such as Ecotricity Group Ltd. to boost competition. Energy regulator Ofgem said in June suppliers must trade fairly with smaller companies or face fines.
“Our new reforms will create the framework for a far more dynamic and entrepreneurial market, while still ensuring that we get the large scale investment that industry needs,” Energy Minister Greg Barker said. “Opening up the electricity market to more competition is a fundamental part of the reforms we are introducing through the energy bill.”
The plans are set out in an amendment to the energy legislation as it progresses through Parliament. The bill is aimed at luring 110 billion pounds ($168 billion) of investment in power plants and infrastructure to replace about a fifth of current generating capacity scheduled to retire within a decade.
The amendment that involves setting up an off-taker of last resort for power. The department will conduct a consultation with industry about the proposals later this year. Suppliers would be forced to buy power from generators under certain conditions if they were unable to agree a commercial contract, according to DECC.