<p>The Government's Electricity Market Reform programme will deliver important changes to the electricity market which will reduce barriers to the UK energy market for independent power generators.</p><p>Contracts for Difference (CfD) will reduce barriers to the UK energy market for independent renewable generators by reducing long-term price risk from the generator. Reducing this risk will make it easier to provide long-term contracts for independent generators' power. Under the CfD, when buying power, companies will not need to provide a 'price floor' to generators and Power Purchase Agreements (PPAs) will not need to cover generators' Renewable Obligation Certificates so the contracts will become simpler. This will make it easier for a wider range of companies to offer PPAs, improving competition and encouraging new entrants to the market, which should provide a better deal for independent renewable generators. We are also working with stakeholders to prepare the market for the introduction of the CrD, by considering contracting approaches and a code of practice for the PPA market which will also ensure that a broad range of generators are able to access the CfD.</p><p>The Offtaker of Last Resort proposal will provide eligible independent renewable generators with a guaranteed backstop contract for their power at a set discount to the market price. Together with the CfD this will provide investors and lenders with more certainty over revenue for eligible generators, allowing for greater investment in independent renewable generation and freeing up generators to use innovative routes to market, including shorter-term PPAs.</p><p>The Department's design of the Capacity Market aims to reduce barriers to the UK energy market for independent power generators that are not receiving low carbon support, by providing a steady revenue stream in place of dependence on volatile scarcity prices, allowing greater certainty for investors. Longer-term contracts will also be offered to new plants to enable</p><p>them to spread their cost of capital over a longer period. This is particularly important to independent players as they rely on securing project finance, rather than financing from their balance sheet.</p><p>The Department is also backing Ofgem's work to improve wholesale market liquidity so that it is sufficient to support the market entry of independent power generators. We are doing this by taking backstop powers in the Energy Bill to take action to improve wholesale market liquidity should Ofgem's ambitious package of reforms be delayed or frustrated.</p>