Contracts for Difference (CfD): proposed amendments to the scheme 2020
Download the full outcome
Detail of outcome
The government response confirms the government’s decision on implementing a series of amendments to the scheme ahead of Allocation Round 4, including:
- introduction of a third, offshore wind-only pot in next year’s allocation round
- updating the 2014 Community Benefits and Engagement Guidance for Onshore Wind
- introduction of a separate definition and administrative strike price for floating offshore wind projects
- exclusion of coal-to-biomass conversion projects from future CfD allocation rounds
- extension of the negative pricing rule for future CfD contracts so that CfD generators are not paid when ‘day ahead’ electricity market prices are negative
- strengthening the existing Supply Chain Plan (SCP) process
- introduction of a series of further, technical changes to the operation of CfD allocation rounds
Further consultation
On 24 November 2020 the government launched a further consultation to invite views on:
- more detailed changes to the Supply Chain Plan policy, which are designed to increase the clarity, ambition, and measurability of developers’ commitments, and ensure those commitments are delivered
- several proposed drafting changes to the CfD contract to implement decisions taken in the government response
- several proposed minor and technical changes to improve the operation and clarity of the contract
The new consultation provides copies of the draft amended CfD contract and draft Supply Chain Plan Guidance documents.
Detail of feedback received
We received around 260 individual written responses, and a further 800+ similar responses coordinated by environmental group Biofuelwatch. Responses were from a range of stakeholders, including:
- renewable electricity developers and associated supply chain firms
- trade associations
- local and devolved governments
- academics and think tanks
- members of the public
Original consultation
Consultation description
This consultation seeks views on a number of proposed changes to the Contracts for Difference (CfD) scheme to ensure it continues to support low carbon electricity generation at the lowest possible cost to consumers. CfDs incentivise investment in renewable energy by providing developers of projects with high upfront costs and long lifetimes with direct protection from volatile wholesale prices, and they protect consumers from paying increased support costs when electricity prices are high.
The consultation proposes changes to the CfD scheme that would, if implemented, apply to contracts awarded through future allocation rounds, the next of which is planned to open in 2021 subject to any required state aid approval of planned changes. The proposed changes relate to:
- delivering the UK’s 2050 net zero emissions target
- bioenergy
- allocation round design
- improving the operation of the CfD
- supporting a smart, flexible system
The consultation also invites views on some minor potential changes to the Contracts for Difference (Allocation) Regulations 2014 to further improve their operation and clarity.
An Impact Assessment has been published alongside the consultation to provide an assessment of the costs and benefits of the key aspects of these changes should they be implemented.
COVID-19 updates
Extension to consultation end date
In the light of COVID-19, we have extended the consultation period to May 29 to give people more time to respond.
Postal responses
Due to current restrictions we are not able to access responses sent by post to 1 Victoria Street. If you would like to make a postal submission, or have already done so, please contact the team at BEISContractsforDifference@beis.gov.uk or on 020 7215 5000.
Documents
Last updated 24 November 2020 + show all updates
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Government response published.
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Consultation end date extended to 29 May.
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First published.