Posted: 11 November 2016
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Government confirms £290m Contracts for Difference funding
Government confirms £290m Contracts for Difference funding

The Government has unveiled details of the second round of Contracts for Difference (CfD), where companies will compete for an initial £290 million worth of contracts for renewable electricity projects.

National Grid will continue to play a key role in the CfD process as the Electricity Market Reform (EMR) Delivery Body.

"There is built-in validation supporting applicants at each step"

Yasharn Smith, National Grid’s Manager for EMR – CfD.

 

Round 2 of CfD is aimed at stimulating the market for less-developed technologies. It will be open to offshore wind, advanced conversion technologies (ACT), anaerobic digestion (AD) less than 5MW, dedicated biomass with or without combined heat and power, wave, tidal stream, and geothermal.

The application window opens in April 2017 and covers projects which will be delivered in either 2021/22 or 2022/23.

One million homes

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Yasharn Smith, National Grid’s Manager for EMR – CfD.

The Department for Business, Energy & Industrial Strategy estimates that the second CfD auction will result in enough renewable electricity to power about one million homes and will cut carbon emissions by around 2.5 million tonnes a year from 2021/22 onwards. Draft administrative strike prices have also been confirmed for each technology, except for geothermal where further information is being sought.

The Government has announced £290m of annual funding over the total 15-year contractual period, meaning that up to £4.35 billion could be invested as part of the round 2 CfD allocation. Ministers have also launched a consultation on whether onshore wind projects on remote islands should be treated differently from onshore wind projects on mainland Great Britain. Alongside the CfD announcement, the Government revealed a consultation on proposals to end unabated coal power generation by 2025.

Supporting the application process

National Grid will continue to play a key role in the CfD process as the Electricity Market Reform (EMR) Delivery Body. We will be responsible for providing the secure IT systems to operate the CfD allocation round, engaging with applicants, registering and assessing applications, and administering the allocation award process, including running an auction where required.

The first stakeholder event will take place in London on 1st December, with around 100 applicants expected to participate alongside representatives from the wider industry. A number of other tailored events will follow, including conferences, one-to-one surgeries, system training and presentations.

Applicants for Round 2 will also benefit from a newly-developed secure online platform to guide them through the application process, as Yasharn Smith, National Grid’s Manager for EMR – CfD, explains: “The EMR IT system was delivered successfully earlier this year and was based on the customer feedback and lessons learned from Round 1.

“There is built-in validation supporting applicants at each step, which will also significantly help our team in processing and assessing the applications efficiently.”

For more about the Round 2 CfD process, visit the EMR portal.

European collaboration