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    CfD overhaul considered by UK

    To encourage more investment in the deployment of renewable energy sources, the UK government is considering significant changes to its Contracts for Difference (CfD) programme.

     

    Nowadays, developers’ bid prices are taken into account while awarding CfDs. The government is currently looking for information and opinions on how to examine applications based on a project’s contribution to the overall health of the industry as well as its ability to offer low-cost renewable energy deployment.

     

    These changes can require bidders to take into account overall costs as well as “non-price factors” like supply chain sustainability, filling skills gaps, innovation, and enabling system and grid flexibility and operability.

     

    For instance, more investment in supply chain sustainability will help lower its carbon footprint and give it access to the materials and resources it needs to scale up sustainability in the long run, according to Whitehall.

     

    It was further said that investments made to close the skills gap would aid in the training of the technicians required to deploy ever-larger renewable energy producing stages.

     

    Graham Stuart, Minister of State for Energy Security and Net Zero, said “Our flagship Contracts for Difference scheme has been hugely successful in supporting British low-carbon electricity generation, while also driving down costs for the benefit of consumers.”

     

    “But we want to go further to ensure we maximise the scheme’s potential to improve energy security and ensure renewable energy developers can make the necessary investment in supply chains and innovation, which will ultimately make for a stronger sector and help our economy to grow.”

     

    “This potential reform to the scheme to introduce non-price factors presents a solution to grow the renewable energy supply chain as we accelerate our energy transition plans to power more of Britain from Britain.”

     

    “This Call for Evidence is part of our work to continue to evolve the CfD scheme as we consider long-term market arrangements through the Review of Electricity Market Arrangements.”

     

    Following recommendations from Tim Pick’s report earlier this month and Chris Skidmore’s Net Zero Review, the government is considering adding non-price criteria to the CfD auction allocation process.

     

    The government will start a consultation on more specific suggestions if after this Call for Evidence, appropriate adjustments to the CfD system have been found and are judged to be more effective than other potential policy levers.

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