Energy industry backs plan to save businesses and homes up to £18bn a year
The energy industry has thrown its weight behind a plan it says could save homes and businesses up to £18bn a year, by reducing the prices charged for electricity generated from sources other than gas.
Energy UK, the trade body for the sector, said its proposals could cut £18bn a year from energy bills, including £11bn for businesses.
This could deliver a saving for households of between £150 and £250 a year.
The business secretary, Kwasi Kwarteng, is understood to have met members of Energy UK to discuss the proposal and is said to be considering it seriously as an option to present to the next prime minister.
The Conservative party will announce the result of a vote for its new leader on Monday, with Liz Truss widely expected to win the mandate.
The voluntary scheme would work by separating the cost of electricity from sources such as nuclear, solar and windfarms from the sky-high prices being paid for electricity generated by burning gas in power stations.
Gas prices have more than tripledsince Russia began reducing the volumes pumped into Europe in the months before its invasion of Ukraine.
At the moment, the way electricity auctions are designed means the price of all electricity is closely pegged to the price of gas.
Under the proposals – first suggested by the UK Energy Research Centre – nuclear power stations and renewable electricity generators would be encouraged to sign up to a new type of contract. These contracts for difference (CfDs) would mean selling their electricity at a lower price, but one that was fixed and guaranteed over a number of years.
Many older nuclear, solar and wind generators are on renewable obligation (RO) contracts, under which they sell at the current wholesale rate.
The market structure has
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