The UK has announced plans for voluntary long-term wholesale price contracts (WCfD) for existing renewable generators to reduce exposure to gas-driven wholesale electricity prices
Around 30% of electricity remains linked to gas prices, leaving households vulnerable to global shocks, it says; reforms aim to improve price stability
Additional measures include higher windfall taxes, expanded solar deployment, and unlocking land for up to 10 GW of new clean energy capacity
The UK government plans to ‘break the link’ between gas and electricity prices by increasing the role of renewable energy in the power mix. Among the measures it suggests is the introduction of long-term fixed-price contracts for renewable energy.
According to the government, around 30% of Britain’s electricity – mainly renewable energy generation – still depends on wholesale prices linked to gas, leaving households vulnerable to global price shocks while referring to the Middle East crisis.
Voluntary long-term Contract for Difference (CfD) or Wholesale CfD (WCfD) – offered to existing low-carbon generators not on fixed-price contracts – will shield families from future crisis, says the government.
At present, the government offers a CfD to an electricity generator by guaranteeing a fixed price for electricity generation. This helps provide price stability for generators over a longer period.
What the government is now proposing is WCfD. Under this, the fixed price option will be extended to existing generators that are not already under a CfD arrangement. They could choose to switch from selling electricity at changing market (wholesale) prices to receiving a fixed price instead. It will reduce their exposure to fluctuations linked to gas prices for both producers and consumers.
It plans to introduce WCfD later this year. An allocation process is proposed to be launched in 2027, according to the Department for Energy Security and Net Zero (DESNZ). It did not share further details about the proposed measure, but said it will launch a consultation later this year.
Additionally, the administration is increasing the tax on electricity generators’ extra profits from 45% to 55% through the Electricity Generator Levy. The aim is to collect more revenue when gas prices rise and use it to help households and businesses facing higher living costs linked to global energy price increases.
The administration believes these measures will further reduce the share of electricity exposed to gas price shocks and incentivize generators to move to fixed contracts not linked to volatile gas prices.
UK Prime Minister Keir Starmer said, “We need to get off the fossil fuel rollercoaster – this will make energy bills more stable and take the pressure off family budgets. When global gas prices spike, people here shouldn’t be picking up the tab.”
Starmer added, “Our focus is simple: easing pressure on household budgets now, while building a homegrown energy system that protects families from global instability in the years ahead.”
These measures are part of the UK’s efforts to ensure a stable electricity supply that’s not dependent on global fossil-fuel price volatility in the wake of the Middle East crisis. It is expediting the launch of plug-in solar systems or balcony solar in UK supermarkets. It will also launch CfD Allocation Round 8 in July 2026 (see UK Turns To Plug-In Solar Amid Middle East Crisis).
In addition, the UK government has also committed an additional funding of £100 million for the Social Housing Fund to support the delivery of up to 57,000 solar installations for households in the current financial year under the Warm Homes Plan (see UK’s £15 Billion Warm Homes Plan To Boost Solar & Battery Uptake).
Further, it plans to streamline outdated rules to unblock the grid and accelerate clean energy deployment. Energy Secretary Ed Miliband announced plans to use brownfield land, industrial sites, and railway sites to host solar panels and wind turbines. “This could unlock up to 10 GW of capacity, even using only a fraction of government land, powering the equivalent of around 5 million homes,” according to the government.
Earlier this month, DESNZ approved an 800 MW solar PV farm with battery storage, touted to be the largest solar power generation facility in the country (see UK Approves Country’s Largest Solar Project At 800 MW).
