UK Draws Up Plans to Cap Revenues of Renewable Power Producers

(Bloomberg) -- The UK is pushing ahead with plans to set up a cap on the revenues of renewable power producers, in a bid to limit the impact of soaring household energy bills.

Officials from the Department for Business, Energy and Industrial Strategy held talks Monday afternoon with some of the country’s biggest renewable power companies, according to people familiar with the matter who asked not to be named because the matter is private. 

Talks are focused on a mechanism similar to the one proposed in the European Union that sets a cap on revenues of renewable power producers and channels the funds to help consumers, the people said. The plans have not yet been finalized and could still change. 

A BEIS spokesman declined to comment on specific details, saying only that the government continues to help shield households from global energy price increases.

It’s a delicate balance to try and cushion the impact of record-high costs while incentivizing the industry to make the investments necessary to overhaul Britain’s power system in the coming decades to slash emissions and increase domestic supplies.

Government and industry have been in talks for weeks to try to come up with a plan ahead of winter. Original proposals had focused on transitioning low-carbon generators to selling power at long-term contracts for fixed prices, rather than at market prices. But discussions broke down over concerns related to the way most of the electricity was already hedged for the rest of this year. 

Monday’s talks included a core group of some of the biggest low-carbon generators in Britain, including the UK units of RWE AG, Orsted A/S, Vattenfall AB and Electricite de France SA. Local companies SSE Plc, Drax Group Plc, Scottish Power Ltd. and Octopus Energy Ltd. are also involved.

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