United Kingdom

United Kingdom

Further CfD budget increase

UK: The government has again increased the budget available for offshore developers in the upcoming Contracts for Difference (CfD) auction by £25 million (€33 million).

Energy Secretary Ed Davey said there was a high demand for CfDs
Energy Secretary Ed Davey said there was a high demand for CfDs

The Department for Energy and Climate Change (Decc) has increased the pot for less-established technologies by £25 million. This means offshore wind developers can bid for a slice of £260 million.

The total budget for the first auction of CfDs is now £325 million. Established technologies budget is kept at £65 million.

In the announcement, Decc said the budget increase shows the government's "commitment" to helping the less-established technologies, like offshore wind, to become competitive as the established technologies.

Decc previously increased the budget in October from a total of £205 million to £300 million.

Developers for low carbon technologies will be able to begin bid for a support contract from tomorrow after the government accelerated the scheme.

The auction window will now open on 29 January, as opposed to the previously announced date of 18 February. It will close on 4 February, rather than 24 February as was originally planned.

Under the CfD scheme, renewable energy projects will be handed a 15-year contract, which guarantees a set price for the electricity produced.

For wind projects, the guaranteed prices will be £95/MWh produced onshore and offshore sites will receive £155/MWh. The prices will progressively decrease to £90/MWh and £140/MWh respectively by 2018/19.

The budget for next year's allocation round is yet to be announced but Decc has indicated an extra £50 million could be available for the established technologies pot, which includes onshore wind.

Non-Delivery Disincentive

Alongside the budget increase, Decc announced its Non-Delivery Disincentive (NDD). The policy set out penalties to an applicant that fails to sign a CfD if offered one or fails to deliver the project.

Decc said the policy was designed to avoid wasteful budget allocation and to put off speculative applications.

The policy includes deterrents such as being unable to resubmit a project for a CfD on the same site as originally planned if offered a contract and failing to sign it. The ban lasts for 13 months from the date the CfD is offered. 

Developers which do sign CfDs will be expected to reach project mllestones that will form part of the support agreement. 

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