Contracts for Difference: contract changes for Allocation Round 6
Read the full outcome
Detail of outcome
The government response confirms our decision to make several amendments to the Contracts for Difference (CfD) standard terms and conditions (STCs) and Private Network (PN) CfD Agreement for the sixth CfD Allocation Round (AR6).
The amendments to the contract include changes to the PN CfD Agreement to ensure that generators that directly supply offshore oil and gas facilities are ineligible for that Agreement from AR6 onwards, implementing the government’s previous decision on this matter. The proposed amendments are intended to prevent consumers, who ultimately fund the CfD scheme through their energy bills, from subsiding electrification of the offshore oil and gas sector.
The amendments to the contract include strengthening Know Your Customer (KYC) checks in the CfD STCs to ensure that generators engage effectively with KYC requirements across the full contract term and the introduction of a suspension of payments for generators who fail to comply with KYC requirements.
In addition, the amendments to the contract include changes to the Change Control Procedure in order to clarify the current Annex 2 contract terms, which gave rise to possible cases where General Amendments are not implemented uniformly across the class of affected CfDs.
We have also amended the definition of the Milestone Delivery Date (MDD) to allow the MDD to be extended where a generator has not received confirmation from the Ministry of Defence (MOD) of the availability of suitable mitigation measures in relation to interference between windfarms and air defence radar systems.
Detail of feedback received
We received 13 responses to this consultation, from:
- developers of renewable generating stations - 12
- trade associations – 1
Original consultation
Consultation description
This consultation seeks views on proposed drafting changes to the Contracts for Difference (CfD) Standard Terms and Conditions and Private Network Agreement in advance of Allocation Round 6 (AR6), which is scheduled to open in March 2024.
The proposed changes will:
- streamline the Know Your Customer (KYC) checks in order to ensure that generators provide relevant KYC information to the Low Carbon Contracts Company (LCCC) when required, along with stronger enforcement measures, including a new Operational Condition Precedent and the ability for LCCC to suspend CfD payments until KYC requirements are met
- amend the CfD Private Network Agreement to ensure that generators that directly supply offshore oil and gas facilities are ineligible for that Agreement in AR6 onwards, implementing the policy decision published in July 2023 in the government response to considerations for future Contracts for Difference rounds – including AR6
- adjust the Change Control Procedure in Annex 2 of the Standard Terms and Conditions to introduce a revised threshold requiring a majority (more than 50%) of affected generators to trigger a Classification Objection dispute, a new process requiring all such disputes to be handled as a single dispute, as well as several new definitions to reflect new drafting
- amend the definition of Milestone Delivery Date (MDD) to allow the MDD to be extended where a Generator has not received confirmation from the Ministry of Defence that it has met certain obligations in relation to mitigating adverse effects on defence radar systems
The proposed drafting changes are shown as tracked amendments in the CfD Standard Terms and Conditions and CfD Private Network Agreement, published alongside the consultation document.
The consultation also invites views on how the 18-month MDD has been operating in practice to inform government’s thinking on whether any changes might be needed for future allocation rounds.
We welcome responses from anyone with an interest in the proposals, in particular those considering participating in AR6.
Documents
Updates to this page
Published 19 December 2023Last updated 13 March 2024 + show all updates
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Government response published.
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First published.