On 23rdJuly 2018, the Department for Business, Energy and Industrial Strategy (BEIS) announced that the next auction round for the allocation of Contracts for Difference (CfD) for eligible renewable energy generation will open in May 2019.
In addition, BEIS announced that further allocation rounds will be held every two years starting from 2021. With £176 million allocated during the second allocation round (in 2017), and £557 million in committed funding remaining, it can reasonably be expected that there will be auctions in 2019, 2021, 2023 and (potentially) 2025.
What is a Contract for Difference?
A CfD is a private law contract between a low carbon electricity generator and the Low Carbon Contracts Company. A CfD gives a generator greater certainty and stability of revenues by reducing their exposure to volatile wholesale prices and protecting consumers from paying for higher support costs when electricity prices are high.
CfDs “ What will the impact be?
Both dedicated Biomass along with Combined Heat and Power and Advanced Conversion Technology (such as gasification) are likely to be experience stricter efficiency eligibility criteria in the forthcoming allocation rounds, which may make these technologies less price competitive at auction. On the other hand, it is likely that the cost of Offshore Wind will continue to fall.
In the last allocation round, Offshore Wind accounted for over 95% of projects awarded a CfD.
TNEI has extensive experience with supporting Offshore Wind projects at all levels and sizes, and has previously conducted due diligence and electrical design work on projects won at 2017 auctions. This positions TNEI to be able to provide winning proposals for Offshore and Remote Island Wind on CfD tenders for the next auction and beyond.
