CfD Stakeholder Bulletin — 16 November 2023
Summary
DESNZ published AR6 parameters raising offshore wind strike prices and separating offshore wind into its own pot, alongside launching consultation on sustainable industry rewards for AR7. The ASP increases address the failed AR5 auction where no offshore wind projects bid. DESNZ also proposes additional CfD revenue for projects demonstrating supply chain sustainability from AR7.
Why it matters
The ASP increases acknowledge that administered prices were set too low relative to project costs, forcing government to correct market failure through higher guaranteed revenues. As such, this transfers more risk from developers to consumers while the sustainable industry rewards proposal adds non-price allocation criteria that favour incumbents with established supply chains over pure cost competition.
Key facts
- •AR6 offshore wind moved to separate pot with raised ASPs
- •Sustainable industry rewards consultation closes 11 January 2024
- •New rewards would provide extra CfD revenue for supply chain sustainability from AR7
Timeline
Areas affected
Related programmes
Memo
Contracts for Difference: Stakeholder Bulletin 16 November 2023 AR6 core parameters published The Government has today published a number of documents setting out key details for Allocation Round 6 (AR6) of the Contracts for Difference (CfD) scheme. These documents are as follows: • Core parameters, including administrative strike prices (ASPs), delivery years and pot structure • ASP methodology note • Detailed AR6 timeline (PDF, 159KB) • Draft allocation framework The core parameters confirm that the Government has raised the ASP for offshore wind, as well as other technologies, and will separate offshore wind into its own pot in AR6. You may also wish to read the Government press release about the publications. Sustainable industry rewards consultation The Government has today launched a consultation on introducing sustainable industry rewards (formerly non-price factors) into the CfD scheme from AR7. The introduction of these rewards would see projects receive extra revenue support through the CfD for taking significant action to boost the sustainability of their supply chains. • Respond to the consultation The consultation closes on 11 January 2024. General Data Protection Regulation This stakeholder bulletin is being circulated to people who have opted in to the Contract for Difference stakeholder contact list. We issue these stakeholder bulletins as a convenience to interested parties, however it is not in any way essential to be on this list to participate in major consultations or allocation rounds. Purpose & scope of this list: This list is managed by the Department for Energy Security and Net Zero (and any successor departments) and will be used to inform interested parties of policy developments relevant to the Contract for Difference scheme for renewable energy projects (and any direct successor schemes). It is not used for any other purposes. To be removed from the circulation list: Please send a blank e-mail with the subject ‘opt out’ (if the receiving e-mail you use is different to the one you send the e-mail from, include that e-mail address in the subject of the e-mail) to ContractsForDifference@energysecurity.gov.uk. If you have received this indirectly and want to be added to this list: Send a blank e-mail with the subject line ‘opt in’ to ContractsforDifference@energysecurity.gov.uk. You can withdraw your consent to opt in at any time. We will normally keep your address on this list until you: a) withdraw your consent to opt in, b) the scheme closes without any successor, c) we receive reports your email address is no longer operational, or d) you do not respond to a periodic request from us to reconfirm your desire to opt in.