Changes to Contracts for Difference Standard Terms and Conditions ahead of upcoming Allocation Round under consultation

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Department for Business, Energy & Industrial Strategy (BEIS) seeks views on further clarificatory and technical drafting changes to the Contracts for Difference Standard Terms and Conditions ahead of the fourth allocation round.

The Contracts for Difference (CfD) scheme is the Government’s main mechanism for
supporting new, low carbon electricity generation projects in Great Britain.

Contracts for Difference are 15-year private law contracts between renewable electricity generators and the Low Carbon Contracts Company (LCCC), which manages CfDs at arm’s length from Government.

Contracts are awarded in a series of competitive auctions, known as allocation rounds, which have been run every two years since 2015. The lowest price bids are successful in the auction process.

£265 million per year will be provided to businesses in the fourth allocation round, which aims to double the renewable electricity capacity secured in the previous round and generate more than the previous three rounds combined.

Since March 2020, the government has consulted, and published its decisions, on a series of changes to the CfD scheme and contract terms in preparation for the fourth allocation round, which will open to applications from developers of renewable technologies in December.

According to BEIS, the proposed changes as part of this new consultation will:

  • ensure that the contract continues to function as intended by reflecting the UK’s position in a number of specific areas relevant to the CfD scheme following the UK’s exit from the EU
  • subject to a final decision by Ofgem on whether and when to remove Balancing Services Use of System Charges from generators, disapply the annual CfD strike price adjustment for changes to balancing system charges in respect of relevant fourth allocation round  CfD Generators
  • allow generators who are awarded contracts in the fourth allocation round more time to fulfil their Initial Conditions Precedent following contract signature, to reflect the larger number of applicants expected to apply to participate in the forthcoming allocation round

BEIS welcomes responses as part of this consultation from anyone with an interest in the proposals, in particular from those considering participating in the fourth allocation round.

This consultation closes at

More information about this consultation and how to take part is available on the UK Government website.