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Round 2 of the Contracts for Difference released for Great Britain

  • United Kingdom
  • Energy and infrastructure

13-09-2017

The Department for Business, Energy & Industrial Strategy (BEIS) has released the results for the Electricity Market Reform Contracts for Difference (CFD) Allocation Round 2.

The results emphasise the increasing competitiveness of renewable energy even for technologies which have required higher support than other technologies such as onshore wind and solar.

The highest clearing strike prices (being £74.75 for 2012/22 and £57.50 for 2022/23) are significantly lower than for CFD Round 1.

For Offshore Wind, there was a reduction by 50% for delivery years 2022/23 and 38% for delivery years 2021/22. Reflecting lower technology, project and corresponding financing costs over the last two years.

56% more Capacity (GW) was allocated in Round 2 utilising 44% less budget than Round 1. Approximately 10% of bids were successful.

It is quite clear that developers have bid far more aggressively for CfDs than predicted, which is consistent with other markets with auction style tenders. It is also an indication of developers wishing to realise their investments made to date.

ACT and dedicated biomass revenues are supplemented by gate fees and heat supply revenues respectively and only the biomass content of the fuel is eligible for the CfD. Accordingly, the strike price for such technologies is not directly comparable with offshore wind.

A key concern however is how little budget is now available for future Rounds. Given this pricing coupled with the rapid advancements being made in storage technology many in the industry hope that the Government will see fit to focus on renewable energy growth and an increased budget for the future.

Below is a table comparing Clearing Strike Prices and Capacity:

Technology Type

Clearing Strike Price 2021/22 Clearing Strike Price 2022/23 Capacity (MW)awarded over the two delivery years
Advanced Conversion Technologies(“ACT”)   £74.75 £57.50 64.31
Dedicated Biomass with CHP £74.75 £40.00 85.64
Offshore Wind £74.75 3,196

The table produced by BEIS detailing the results can be found by clicking here.