Contracts for Difference (CfD) Allocation Round 4: further changes to the CfD contract
Read the full outcome
Detail of outcome
The government response confirms our decision to make several additional amendments to the CfD Standard Terms and Conditions (the contract) for the 4th CfD Allocation Round (AR4).
The amendments to the contract include the replacement of references to EU State aid rules with references to ‘subsidy’ or ‘subsidy control’ where appropriate, following the UK’s departure from the EU. Several other adjustments have been made to the contract, including the removal of a number of redundant EU provisions and updates to several definitions and legal references.
The changes align the contract terms with the UK subsidy control regime announced in June 2021 and our international obligations on subsidies, including the UK-EU Trade and Cooperation Agreement. We will monitor the progress of the Subsidy Control Bill through Parliament.
The government response confirms that the CfD contract has been amended to allow generators who are awarded contracts in AR4 up to 20 business days (formerly 10) to fulfil their Initial Conditions Precedent following contract signature. The additional time allotted reflects the larger number of applicants expected to apply to participate in the forthcoming allocation round.
The response confirms that an alternative strike price adjustment formula will be inserted into the CfD contract to account for the possible decision by Ofgem that generators should no longer pay Balancing Services Use of System (BSUoS) charges. If Ofgem decides that generators should no longer pay these charges, then after AR4 closes, the strike prices of those successful projects liable to pay BSUoS charges will be adjusted downwards through the annual strike price adjustment undertaken by LCCC to account for the fact that BSUoS is no longer due to be paid.
Detail of feedback received
We received 11 responses to this consultation, as follows:
- developers of renewable generating stations - 7
- related trade associations - 2
- private company - 1
- crown dependency government - 1
Original consultation
Consultation description
This consultation seeks views on further clarificatory and technical drafting changes to the Contracts for Difference Standard Terms and Conditions in advance of Allocation Round 4 (AR4), which is scheduled to open in December 2021. The proposed changes will:
- ensure that the contract continues to function as intended by reflecting the UK’s position in a number of specific areas relevant to the CfD scheme following the UK’s exit from the EU
- subject to a final decision by Ofgem on whether and when to remove Balancing Services Use of System Charges from generators, disapply the annual CfD strike price adjustment for changes to balancing system charges in respect of relevant AR4 CfD Generators
- allow generators who are awarded contracts in AR4 more time to fulfil their Initial Conditions Precedent following contract signature, to reflect the larger number of applicants expected to apply to participate in the forthcoming allocation round
The proposed drafting changes are shown as tracked amendments in the CfD Standard Terms and Conditions, published alongside this consultation document.
We welcome responses from anyone with an interest in the proposals, in particular from those considering participating in AR4.
Read the BEIS consultation privacy notice.
Please don’t send responses by post to the department at the moment as we may not be able to access them.
Documents
Updates to this page
Last updated 25 November 2021 + show all updates
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Government response published.
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First published.