Renewable energy policy database and support

An operator of an eligible RES-E technology, willing to secure a Contract for Difference, has to take part in an allocation round (sec. 13 EnA 2013).

Budget notice. Prior to each CfD allocation round the Secretary of State must give a “budget notice”, inter alia specifying the overall budget available for the allocation round and the applicable administrative “strike prices” for that allocation round (Reg. 11 (a) and (b) CfD Allocation Regulations 2014).

Qualification requirements. To be able to participate in the allocation round RES-E generators have to meet the following qualification requirements:

− Provide copies of the relevant planning consents, which enable (1) the relevant CfD unit to be established/ altered and (2) electricity generated by the relevant CfD unit to be supplied to the national transmission/ distribution grid or a private grid (Reg. 23 (2) (a) and (b) CfD Allocation Regulations 2014).

− Provide copies of connection agreements allowing connection to the grid where a direct/ partial connection applies or is to apply to the relevant CfD unit (Reg. 25 (2) CfD Allocation Regulations 2014). Where a direct/ partial connection does not apply or is not to apply to the relevant CfD unit, statement has to be provided by the applicant which states that (1) no such connection is, or is to be, applicable and (2) no agreement to allow such a connection has been obtained or is to be sought during the period in which a CfD may apply to the relevant CfD unit (Reg. 25 (3) (a) and (b) CfD Allocation Regulations 2014).

− Operators of projects of and beyond 300 MW must provide a copy of the Supply Chain Statement issued by the Secretary of State (Reg. 26 CfD Allocation Regulations 2014 in conjunction with Reg. 11 EMR General Regulations 2014).

− In case of offshore wind, the applicant must demonstrate that (1) after all phases are completed, the capacity of the CfD unit will not exceed 1500 MW, (2) the 1st phase will represent at least 25% of the total capacity of the CfD, and (3) the 1st phase is expected to be completed by 31 March 2019 latest and the last phase will be completed no later than 2 years after the completion of the 1st phase (Rule 5 Final Allocation Framework 2014). Application Determination. Once the deadline for the CfD application expired, an application determination process starts. National Grid will then determine which applications qualify to participate in the allocation process and within 10 working days after the application closing date inform all applicants whether or not respective application is a qualifying application (Reg. 17 and 19 CfD Allocation Regulations 2014). Non–qualifying applicants have the right of application review by National Grid (Reg. 20 (1) CfD Allocation Regulations 2014). Request for review (“review notice”) has to be submitted to National Grid no later than within 5 working days after the date of non-qualification notice (Reg. 20 (2) (a) CfD Allocation Regulations 2014). Where after the non-qualification review an applicant is still not qualified, he has the right of appeal to Ofgem (Reg. 43 CfD Allocation Regulations 2014).

Allocation process. When application determination is completed National Grid starts with the CfD valuation and allocation process covering the following stages:

• Valuation of applications. National Grid compares the total value of all qualifying applications for each delivery year with the budgets available for each “pot” as well as minimum (floors) and maximum (caps) capacity limits, if applicable, in order to decide whether a constrained or unconstrained allocation is applicable (Reg. 29 (1) and (2) CfD Allocation Regulations 2014). The valuation must be carried out in accordance with the calculation formula set out in Schedule 2 Final Allocation Framework 2014).

• Unconstrained allocation. Where the value of all relevant qualifying applications does not exceed the assigned budget in every delivery year or the maximum/ minimum capacity, all qualifying applications are considered as successful applications and they are offered a Contract for Difference at the prevailing administrative strike prices for the respective technology (Rule 9 Final Allocation Framework 2014).

• Constrained allocation (Auction). Where the value of all relevant qualifying applications exceeds the assigned budget or minimum/ maximum capacity, which is specified in the relevant Budget Notice, a constrained allocation is applicable, i.e. National Grid will organise an auction. Where the maximum/ minimum capacity is exceeded, an auction will be organised only for technologies subject to that maximum/ minimum capacity (Rule 9 Final Allocation Framework 2014).

• Bid submission. If action is applicable, within 5 working days National Grid will issue a Notice of Auction to all relevant qualifying applicants and invite them to submit their sealed bids (Rule 10.1 Final Allocation Framework 2014). Each bid must contain (1) the applicant’s proposed “strike price” for each MWh of metered output, which cannot exceed the applicable administrative strike price, (2) Target Commissioning Date and start date of the Target Commissioning Window, and (3) the capacity of the CfD unit (Rule 11.1 Final Allocation Framework 2014). Moreover, for each application, 10 flexible bids with different combination of proposed “strike prices”, capacities, and/or Target Commissioning Dates can be submitted. Only three bids may, however, have a Target Commissioning Date in the same delivery year (Rule 11.5 Final Allocation Framework 2014). In addition, in all flexible bids proposed first delivery year must be same or later than in the original application. Also the capacity has to be no greater than the capacity indicated in the original application (Rule 11.6 Final Allocation Framework 2014). Where no sealed bid is submitted by the applicant, National Grid will assign administrative strike price for the respective type of technology and delivery year as specified in the submitted application (Rule 11.8 Final Allocation Framework 2014). CfD Notifications. At the end of the allocation round, National Grid will inform all qualifying applicants whether they are successful or not. In addition, National Grid will notify the CfD Counterparty (LCCC) about the successful applicants, so that LCCC can offer them a Contract for Difference (Reg. 35 (2), 42 (2), (3), and (5) CfD Allocation Regulations 2014). 

Low Carbon Contracts Company (LCCC), National Grid, the Gas and Electricity Markets Authority (Ofgem)

Failing to fulfill the terms and condition of the Contracts of Difference, the CfD Counterparty has the right to terminate the contract under specific conditions (Part 12 CfD Standard Terms and Conditions Version 2).

Failing to fulfill the terms and condition of the Contracts of Difference, the CfD Counterparty has the right to terminate the contract under specific conditions (Part 12 CfD Standard Terms and Conditions Version 2).