Low Carbon Contracts

We are a private company with a mission to accelerate net zero through facilitating low carbon investment.

We work closely with our shareholder The Department of Energy Security (DESNZ), to carry out key aspects of the Electricity Market Reform.

Government Owned

As a government-owned entity, along with our sister company, the Electricity Settlements Company (ESC), we are governed by framework documents setting out shareholder relationships and guiding principles. We are also categorised as governmental arm’s-length bodies. We are led by an independent board, on which the government is represented, and constitutional documents form part of our governance structure.

Contract Management

Under the government’s Contracts for Difference (CfD) scheme, we manage contracts with low–carbon electricity generators. The aim of the scheme is to incentivise investment in renewable energy, by protecting developers of projects with high upfront costs and long lifetimes, from volatile wholesale prices. Contracts under the scheme also protect consumers from paying increased support costs when electricity prices are high. We also manage the Supplier Obligation mechanism, which is a compulsory levy on electricity suppliers, to meet the cost of CfDs. We forecast these payments using sophisticated models.

Settlements

As a Capacity Market Settlement Body, ESC is responsible for managing all financial transactions and associated assurances under the Capacity Market (CM) scheme, such as: credit cover; meter assurance; penalties; and payments to Capacity Providers.