Considerations for future Contracts for Difference (CfD) rounds
Download the full outcome
Detail of outcome
The government response confirms the government’s decision on implementing the following amendment to the scheme ahead of Allocation Round 6:
- Private Network (PN) CfD Agreement: to implement the proposal to amend the PN CfD Agreement to make renewable generators that directly supply offshore oil and gas facilities ineligible for that Agreement. The specific amendments to the PN CfD Agreement will be consulted on before AR6 opens. Corresponding changes will be made to the Allocation Framework
It also confirms the government’s response on a range of policy considerations for future rounds beyond Allocation Round 6, including:
- floating offshore wind – to continue to work with stakeholders with a view to developing a long-term solution to the eligible definition of floating offshore wind projects
- facilitating coordinated infrastructure – to continue to engage with stakeholders to help build an enabling framework to supporting the building of a first multipurpose interconnector (MPI), as committed to in the Powering Up Britain Energy Security Plan
- offshore wind phasing – to keep phasing policy for offshore wind projects in place, but continue to keep under review, including the expansion to floating offshore wind projects in future allocation rounds
- CfD appeals system – to further consider how best to streamline the process for future rounds
- repowered renewable generation assets – to fully explore the most appropriate revenue support mechanism for repowering of existing renewable sites, including the role that the CfD specifically could deliver
Changes for future rounds will be subject to further consultation ahead of future allocation rounds, where appropriate.
Detail of feedback received
We received 67 responses to the consultation from a wide range of stakeholders, including:
- renewable electricity developers and associated supply chain firms
- trade associations
- suppliers
- academics and think tanks
- investment bodies
- devolved governments
Original consultation
Consultation description
Contracts for Difference (CfD) scheme is government’s main support mechanism for new low-carbon electricity generation projects in Great Britain. The government continuously reviews the CfD scheme to ensure it remains fit-for-purpose as our electricity system evolves and we work towards our net zero ambitions.
This consultation is inviting views on potential changes for Allocation Round 6 (AR6) (due to open in 2024) and future rounds beyond AR6, as well as providing several policy updates.
These include:
- a proposal to make electricity supplied by private wire to offshore oil and gas facilities ineligible for CfD payments;
- requests for views to inform whether:
- the definition of floating offshore wind should be amended to reflect the evolving nature of this new and emerging technology
- offshore wind farms connected to a multi-purpose interconnector should be eligible to apply for a CfD and how this could be enabled
- phasing policy should be retained for fixed-bottom offshore wind projects
- the current CfD appeals process remains appropriate in line with annual auctions
- the CfD is an appropriate mechanism to support repowered projects and questions around how this could be facilitated
- policy updates in relation to maintaining the balance between market exposure and investor certainty for CfD holders, the interaction between the CfD scheme and Capacity Mechanism on matters of eligibility and the potential consideration of whether other factors beyond price should be taken into account in contract awards
We welcome responses from anyone with an interest in the proposals, including those considering participating in AR6 and future CfD rounds.
See the BEIS consultation privacy notice.
Documents
Last updated 12 July 2023 + show all updates
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Government response published.
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First published.