Transition from the Renewables Obligation to Contracts for Difference

A key aspect of Electricity Market Reform is the transition from the Renewables Obligation, the current main support mechanism for large scale renewable electricity generation, to Contracts for Difference (CfD), the new support mechanism for low-carbon electricity generation, including renewables, nuclear, and Carbon Capture and Storage. CfDs will be open to applicants from mid-2014.

DECC seeks views on the policy and processes for the transition period, from mid-2014 to 31 March 2017, during which the RO and CfD will both be open for applications from new renewable generating capacity. New generating capacity will have a choice of application between the two schemes and will also have the option of applying for an investment contract under Final Investment Decision (FID) Enabling. All applications will be subject to the rules for the scheme in question, and to confirmation that the capacity is not receiving support under one of the other schemes.

We are also seeking views on the arrangements surrounding the closure of the RO to new generating capacity on 31 March 2017, and the options for additional capacity after that date.

Additionally, we are seeking views on the timing of the introduction of the fixed price certificate scheme, which will see the price of a certificate fixed at the 2027 buyout price, plus 10%, to see whether the position remains as set out in the July 2011 White Paper.

DECC is seeking input from as wide a range of interested parties as possible and the consultation includes a series of broad questions to help shape contributions from interested parties. The government response, which we expect to publish towards the end of the year, will draw principally on evidence submitted during the 10 week period.