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Government announces new Contracts for Difference consultation

  • United Kingdom
  • Energy and infrastructure


The Government is currently seeking views on a number of proposed amendments to the Contracts for Difference (“CfD”) scheme, which, subject to this consultation and review, will apply to future allocation rounds. Responses are required by 8th June and DECC will publish its response to the consultation in the Autumn.

The current consultation will focus on:

• preventing cumulation of state aid;

• the definition of a “Foreseeable Change in Law”;

• electricity Storage; and

• a number of minor and technical changes, including previous drafting errors.

The proposed amendments will currently only apply to new contracts and it is left to LCCC how they deal with the existing signed contracts.

Cumulation of state aid

Under the state aid approval it was a requirement that there be no other state aid granted to the developer under a CfD. Accordingly, the proposal is to widen the definition of state aid under the CfD to cover all types of state aid. A developer is not prohibited from applying for a CfD if it has received state aid, however, it will be required to declare and repay any state aid received if it does enter into a CfD.

“Foreseeable Change in Law”

It is proposed to widen the list of events which are regarded as foreseeable changes in law and accordingly not eligible for compensation.

It is proposed that any changes resulting from pre-existing litigation be widened to include proceedings brought against a competent authority as regards any consents, including a judicial review as regards any planning consents. The proposal is also to include as foreseeable any judicial reviews brought within the requisite time limit for such a challenge, regardless of whether brought prior or post the date of the CfD. Whilst the potential for a judicial review is foreseeable the consequences are not and would disagree that this should be a developer risk.

Electricity Storage

It will be clarified that developers will be able to develop and/or use storage on CfD sites subject to ensuring that the CfD payments only relate to electricity generated by the CfD generation facility. To ensure that this is the case, DECC are proposing the following two changes:

(a) a clarification that the BM Unit Metered Volume used to calculate the CfD payments only includes the output of the CfD generating facility;

(b) any storage should be in a separate BM Unit to the CfD facility.

Whilst the clarification is welcome, we believe Ofgem should leave it at the discretion of the developer how they ensure that the output of the CfD facility is kept separate from the storage facility.