Contracts for Difference (CfD): proposed amendments to the scheme 2020

This consultation seeks views on a number of proposed changes to the Contracts for Difference (CfD) scheme to ensure it continues to support low carbon electricity generation at the lowest possible cost to consumers. CfDs incentivise investment in renewable energy by providing developers of projects with high upfront costs and long lifetimes with direct protection from volatile wholesale prices, and they protect consumers from paying increased support costs when electricity prices are high.

The consultation proposes changes to the CfD scheme that would, if implemented, apply to contracts awarded through future allocation rounds, the next of which is planned to open in 2021 subject to any required state aid approval of planned changes. The proposed changes relate to:

• delivering the UK’s 2050 net zero emissions target
• bioenergy
• allocation round design
• improving the operation of the CfD
• supporting a smart, flexible system

The consultation also invites views on some minor potential changes to the Contracts for Difference (Allocation) Regulations 2014 to further improve their operation and clarity.

An Impact Assessment has been published alongside the consultation to provide an assessment of the costs and benefits of the key aspects of these changes should they be implemented.

COVID-19 updates Extension to consultation end date

In the light of COVID-19, we have extended the consultation period to May 29 to give people more time to respond.

Postal responses

Due to current restrictions we are not able to access responses sent by post to 1 Victoria Street. If you would like to make a postal submission, or have already done so, please contact the team at BEISContractsforDifference@beis.gov.uk or on 020 7215 5000.