The latest round of the UK government’s Contract For Difference (CfD) scheme, designed to support the development of renewable energy and other low-carbon technologies, as part of the UK’s transition to a net zero society, has opened for applications.
A Contract for Difference (CfD) is a 15-year private law contract between renewable electricity generators and the Low Carbon Contracts Company (LCCC), a government-owned company that manages CfDs at arm’s length from government. Contracts are awarded in a series of competitive auctions, known as allocation rounds, run every two years with the lowest-price bids being successful.
The latest (fourth) round is the largest so far, with £285 million per year available to help build low-carbon energy projects. Its’ aim is to secure 12GW of electricity capacity – more than in the previous 3 rounds combined. The majority of the money (£200 million) is earmarked for offshore wind. £75 million is for “emerging technologies”, including tidal stream and floating offshore wind, with the remaining £10 million for more established technologies, including onshore solar and wind schemes – included for the first time since 2015.
Energy and Climate Change Minister Greg Hands said:
“The Contracts for Difference scheme is proof that green and growth go hand-in-hand as it continues to be a key driver behind the world-leading renewable energy sector that is providing us with secure clean energy, creating jobs across the UK and opening investment and export opportunities.
The previous 3 rounds have allowed us to push forward with the Green Industrial Revolution and this round will take us further and faster than ever before while continuing to drive down costs for consumers.”
Renewable energy generators located in the UK, that meet the government’s eligibility requirements can apply for a CfD by submitting a ‘sealed bid’. More ifnormation and guidance relating to the fourth allocation round can be found on the government’s website.Â
