Changes to the Contracts for Difference (CfD) scheme will replace the monetary budget applied to allocation rounds with a ‘capacity ambition’.
The UK government announced reforms to the CfD mechanism that will come into effect in the upcoming allocation round seven (AR7). It consulted on several proposals at the beginning of this year.
To align with the capacity targets set out in its Clean Power 2030 Action Plan (CP30), at least 12GW will need to be secured in AR7, AR8 and potentially (depending on speed of deployment) AR9.
To expedite this, the contract budget notice will be published after the contract allocation process has run, rather than at the beginning of an allocation application window as before.
In place of a budget, the government will publish a capacity ambition for the AR7 contract allocation process and publish a forward schedule for future allocation rounds.
In the coming months the government said it will provide clarity on how capacity ambition will work with other auction parameters.
The change is intended to give energy secretary Ed Miliband more control over the budget, able to set it more efficiently with certainty of the capacity to be secured through the auction.
The secretary of state would have more information related to the budget under the changes, which also enable Miliband to view anonymised bid information via the delivery body (which in AR7 will be the National Energy System Operator (NESO)). This oversight would inform the final budget decision.
The full version of this article is available on our sister site, Current± News.
