Additions to the CfD contract arising from the introduction of the Clean Industry Bonus
Read the full outcome
Detail of outcome
The government response confirms our decisions to include the following additions to the Contract for Difference (CfD) contract:
- a provision requiring the generator to comply with the requirements set out in their Clean Industry Bonus (CIB) Statements
- provisions requiring generators to update the Low Carbon Contracts Company (LCCC) on the status of their CIB Statement, CIB Implementation Statement application, and their CIB Implementation Statement or CIB Refusal
- provisions on Performance Related Adjustments linked to the CIB Minimum Standard in case of non-delivery, including the effect of CfD contract termination on this liability, and the methodology for settling Performance Related Adjustments. Policy details are provided to clarify the process, including a worked example in Annex 1
- provisions on payments linked to fulfilling CIB Extra Proposals, including the determination, frequency and notice of instalment amounts, as well as the effects of CfD contract termination. Policy details are provided to clarify the process, including a worked example in Annex 1
- provisions on the conclusiveness of Secretary of State determinations
- a provision to allow for adjustments to CIB Payments in case of a new determination by the Secretary of State
- provisions to index CIB Payments and Performance Related Adjustment
- provisions to apply default interest to CIB Payments and Performance Related Adjustment payments
- provision to require generators to supply to the LCCC their CIB Statement and a director’s certificate within 20 business days of the CfD Agreement Date
- amendments to the definition of Reconciliation Amounts to include CIB Payments or Performance Related Adjustments
- amendments to the conditions of CfD Payments suspensions to exclude suspension of CIB Payments
- amendments to exclude CIB from the CfD’s provisions on force majeure, given CIB force majeure issues are covered in the CIB Guidance
In response to questions raised during the consultation period around the treatment of phased CfD units, the government response also includes an explanation of changes made to the contract designed to accommodate for this scenario.
Detail of feedback received
We received 12 responses to the consultation, mostly from renewable electricity developers, but also from the supply chain and trade unions.
Original consultation
Consultation description
We are proposing additions to the Contract for Difference contract, specifically the changes required to include the Clean Industry Bonus (CIB) in the contract.
The CIB works within the Contracts for Difference (CfD) mechanism to competitively allocate extra revenue support (‘a bonus’) to offshore wind and floating offshore wind applicants who take meaningful action to increase the social, environmental and economic sustainability of the supply chain. Successful generators will be subject to the conditions and rules set out in the CIB Allocation Framework, CIB Guidance, and the proposed draft additions to the CfD contract.
The proposed additions will:
- enable the CfD CIB mechanism to operate through the CfD contract
- ask the generator to comply with all outlined notice requirements
- set the rights and obligations arising from the CIB, CIB payment terms, and how performance related adjustments will operate in cases of non-delivery
- allow the CfD counterparty, the Low Carbon Contracts Company, to act on the contents of the generator’s CIB Implementation Statement, including any Performance Related adjustments
- set out how indexation and interest will work, and how CIB payments will work alongside a generator’s CfD payments
The proposed drafting changes are shown as tracked amendments to the contract which we have published here alongside the consultation document.
We welcome responses from anyone with an interest in the proposals, in particular those considering participating in the first CIB round ahead of Allocation Round 7.
Note that the regulations and the Contract still refer to the policy as the Sustainable Industry Rewards. For the avoidance of doubt, these are the same but the legal terminology will have to continue referencing the old policy name to an extent given it is set out in regulations.
Read our consultation privacy notice.
Documents
Updates to this page
Published 12 November 2024Last updated 6 February 2025 + show all updates
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Government response published.
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First published.