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Detail of outcome
In May 2016, the government issued a consultation proposing changes to the Contracts for Difference and the CFD Standard Terms Regulations. This document sets out the government’s response following consideration of the 62 consultation responses that we received. The changes will apply to future CFD allocation rounds, including the forthcoming second allocation round. In summary, the changes:
- prevent the cumulation of CFD payments with any other State or Union aid received by CFD projects;
- clarify the definition of foreseeability within the definition of qualifying change in law;
- explain how storage should be treated on CFD sites; and
- make a number of minor and technical changes designed to reduce administrative burdens on CFD generators and the Low Carbon Contracts Company.
The Contracts for Difference (Standard Terms) (Amendment) Regulations 2017 have now been laid before Parliament and will come into force on 1 March 2017.
An updated set of draft contract agreements was published in February 2017: Contracts for Difference: standard terms and conditions, February 2017 update.
The CFD scheme was created to provide long-term price stabilisation to incentivise investment in low carbon generation. This consultation proposes a series of amendments to the CFD contract and CFD regulations, intended to apply to future CFD allocation rounds.
The proposed changes relate to:
- Preventing cumulation of state aid
- The definition of foreseeable change in law
- Electricity storage
- A number of other minor and technical changes
Alongside the consultation document, indicative versions of the CFD Agreement and the CFD Standard Terms and Conditions, which incorporate the proposed changes, have also been published.
Generators who are allocated a CFD will sign a CFD Agreement, which then incorporate the CFD Standard Terms and Conditions. The CFD Agreement is a bespoke document including all of the Project-specific information, including the estimated installed capacity, the applicable Strike Price and the particulars of the generator to which the Agreement applies.
The amendments outlined in the indicative version of the CFD Agreement for consultation should be considered to also apply to CFD (Phase 1) (Single) Agreement, CFD (Phase 2), (Single) Agreement, CFD (Phase 3) (Single) Agreement, CFD (Phase 1) (Apportioned) Agreement, CFD (Phase 2) (Apportioned) Agreement, CFD (Phase 3) (Apportioned) Agreement, CFD Private Network Agreement and CFD (UJV) Agreement.