UK issues amendments to the Contracts for Difference (CfD) scheme

25 Nov 2020

The government of the United Kingdom has issued amendments to the Contracts for Difference (CfD) scheme for the fourth Allocation Round (AR4) planned for late 2021, as a result of a public consultation issued in March 2020. The CfD scheme will now comprise a third fixed-bottom offshore wind-only pot (i.e. offshore wind will not compete against other renewables), a separation definition and administrative strike price for floating offshore wind projects (which will be included for the first time in the scheme), and an extension of the negative pricing rule for future CfD contracts so that CfD generators are not paid when ‘day-ahead’ electricity market prices are negative, among other things. The amendments also update the 2014 Community Benefits and Engagement Guidance for Onshore Wind and exclude coal-to-biomass conversion projects from future CfD allocation rounds. The government also issued another consultation to gather opinions on further changes to the Supply Chain Plan policy and the CfD contracts. The AR4 is expected to award 12 GW of renewable capacity, with the offshore wind being caped at 1.5 GW.

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