Contract for Difference: Difference between revisions

Latest revision as of 12:19, 8 December 2020

The Contract for Difference (CFD) scheme is the Government’s main mechanism for supporting (subsidising) low-carbon electricity generation. CFDs incentivise investment in renewable and low-carbon energy by providing developers of projects with high upfront costs and long lifetimes with direct protection from volatile wholesale prices, and they protect consumers from paying increased support costs when electricity prices are high^[1].

Waste related projects are eligible by virtue of the renewable content of the waste used in a project that generates electricity.

Successful developers of renewable projects enter into a private law contract with the Low Carbon Contracts Company (LCCC), a Government-owned company. Developers are paid a flat (indexed) rate for the electricity they produce over a 15-year period; the difference between the ‘strike price’ (a price for electricity reflecting the cost of investing in a particular low carbon technology) and the ‘reference price’ (a measure of the average market price for electricity in the GB market)^[1].

References

↑ ^1.0 ^1.1 BEIS, 2019. Contracts for Difference. [online] GOV.UK. [Accessed 30 Oct. 2019].

[foo-1] 1.0 ^1.1 BEIS, 2019. Contracts for Difference. [online] GOV.UK. [Accessed 30 Oct. 2019].

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 [[Category:Legislation & Policy]][[Category:Economics]]
-The Contracts for Difference (CFD) scheme is the Government’s main mechanism for supporting low-carbon electricity generation. CFDs incentivise investment in renewable energy by providing developers of projects with high upfront costs and long lifetimes with direct protection from volatile wholesale prices, and they protect consumers from paying increased support costs when electricity prices are high<ref name="foo"> [[BEIS]], 2019. [https://www.gov.uk/government/publications/contracts-for-difference/contract-for-difference Contracts for Difference.] [online] GOV.UK. [Accessed 30 Oct. 2019].</ref>.
+The [[Contract for Difference]] ([[CFD]]) scheme is the Government’s main mechanism for supporting ([[Subsidy |subsidising]]) low-carbon electricity generation. CFDs incentivise investment in renewable  and low-carbon energy by providing developers of projects with high upfront costs and long lifetimes with direct protection from volatile wholesale prices, and they protect consumers from paying increased support costs when electricity prices are high<ref name="foo"> [[BEIS]], 2019. [https://www.gov.uk/government/publications/contracts-for-difference/contract-for-difference Contracts for Difference.] [online] GOV.UK. [Accessed 30 Oct. 2019].</ref>.
 Waste related projects are eligible by virtue of the renewable content of the waste used in a project that generates electricity.