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This publication is available at https://www.gov.uk/government/publications/contracts-for-difference/contract-for-difference
The Contracts for Difference (CfD) scheme is the government’s main mechanism for supporting low-carbon electricity generation.
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.
Renewable generators located in the UK that meet the eligibility requirements can apply for a CfD by submitting what is a form of ‘sealed bid’. There have been two auctions, or allocation rounds, to date, which have seen a range of different renewable technologies competing directly against each other for a contract.
Successful developers of renewable projects enter into a private law contract with the Low Carbon Contracts Company (LCCC), a government-owned company. Developers are paid a flat (indexed) rate for the electricity they produce over a 15-year period; the difference between the ‘strike price’ (a price for electricity reflecting the cost of investing in a particular low carbon technology) and the ‘reference price’ (a measure of the average market price for electricity in the GB market).
The Low Carbon Contracts Company (LCCC) is a private company, owned by BEIS. The LCCC is counterparty to the contracts awarded in CfD allocation rounds (auctions) and its primary role is to issue the contracts, manage them during the construction and delivery phase and make CfD payments.
National Grid is the Delivery Body for the CfD scheme, responsible for running the CfD allocation process.
Ofgem is responsible for hearing certain appeals.
The third CfD allocation round (AR3)
This page will be updated with the key documents relating to the third allocation round.
AR3 will open by May 2019. It will be open to eligible Pot 2 (less established) renewable technologies.
Let us know if you’d like to receive updates on the current allocation round: email BEISContractsForDifference@beis.gov.uk
Find past bulletins
Visit the new CfD Allocation Round Resource Portal for a single source of information relating to AR3.
The second CfD allocation round (AR2)
This page sets out the second allocation round auction results, and key documents relating to that round. AR2 ran from March to September 2017.
The first CfD allocation round (AR1)
This page sets out the first allocation round auction results, and key documents relating to that round. AR1 ran from October 2014 to March 2015.