Introducing a Contracts for Difference (CfD) Sustainable Industry Reward
Applies to England, Scotland and Wales
Download the full outcome
Detail of outcome
The government response confirms the government’s decision to implement Contracts for Difference (CfD) Sustainable Industry Rewards (SIR), subject to parliamentary approval.
Some key aspects of the proposed Sustainable Industry Rewards have been amended to simplify the process:
- number of criteria reduced to 2
- number of questions reduced to 3
The criteria for Sustainable Industry Rewards will be:
a. investment in shortening supply chains, in deprived areas in the UK; or
b. investment in more sustainable means of production, anywhere in the world; or
c. combining both approaches, by investing in shorter supply chains in UK deprived areas and ensuring such investment goes to more sustainable means of production
The CfD SIR process will be run as a competitive allocation for extra revenue support 6 months before the main CfD auction. Applicants will need to meet minimum standards to gain access to the CfD round.
Alongside the government response, we have published:
- the draft CfD Sustainable Industry Reward Allocation Framework - the rule book for how the SIR process will operate, including the minimum standard values
- draft guidance
- final impact assessment
We will work with industry to refine the framework, before we publish the final version in the summer.
Detail of feedback received
We received 74 responses to this call for evidence:
- 30 from developers
- 21 from the supply chain
- 18 from various trade associations and public bodies
Original consultation
Consultation description
The government is proposing to introduce a CfD Sustainable Industry Reward (CfD SIR) from CfD Allocation Round 7 onwards.
This follows the Call for Evidence on introducing non-price factors into the Contracts for Difference scheme, for which we published the government response in September 2023.
The CfD Sustainable Industry Reward aims to help accelerate the deployment of low carbon electricity generation, specifically offshore / floating offshore wind, by addressing some of the recent challenges identified by the industry.
The Reward could provide greater revenue support to projects that take meaningful action to increase the economic, environmental and social sustainability of offshore and floating offshore wind deployment.
It could also work with other government policies aimed at increasing the rate of deployment of offshore and floating offshore wind.
The consultation sets out:
- how the proposed CfD Sustainable Industry Reward could operate
- the kind of proposed deliverables we are seeking from this support
- Part 1 of the consultation proposes a model to deliver the CfD Sustainability Reward
- Part 2 proposes the type of factors that could be valued under the CfD Sustainability Reward
The CfD Sustainability Reward could replace Supply Chain Plans (SCPs) for offshore wind and floating offshore wind temporarily (it doesn’t make sense to have both interventions in place together). Existing SCPs will continue to be monitored and enforced. Other technologies with projects over 300MW will still need to continue to comply with the existing SCP requirements.
The consultation is necessary to ensure that the policy could deliver optimal value to consumers as well as a prelude to legislation, though the final decision to proceed with the policy will be based on:
- responses to the consultation
- the overall fiscal situation and policy landscape
- status of the offshore wind and floating offshore wind market
Documents
Last updated 13 March 2024 + show all updates
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Government response published, along with draft copies of the CfD Sustainable Industry Reward Allocation Framework and related guidance.
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First published.