DECC Refines Proposals On Constrained Allocation For CfDs

The Department of Energy and Climate Change (DECC) has published preliminary responses on stakeholder engagement on the question of the method of allocating Contracts for Difference (CfD).

In an earlier energy update, we announced that DECC was by-passing the first two rounds on CfD allocation (first-come, first-served and unconstrained allocation) and moving straight to competitive bidding – constrained allocation. Under this system, the Government is expecting that, in order to win a contract for difference (the new subsidy regime for renewables), generators will have to bid competitively below the published strike price.

Generators and funders have been concerned to establish the actual method of bidding, including the choice between sealed-bid and descending clock, and between cleared-price and pay-as-bid approaches.