Research and analysis

Contracts for Difference and Energy Price Guarantee funding: Winter 2022 to 2023

Data showing how the Contracts for Difference scheme reduced the government funding of the Energy Price Guarantee by £18 per household during Winter 2022 to 2023.

• From: Department for Energy Security and Net Zero
• Published: 22 November 2024

Documents

Contracts for Difference and Energy Price Guarantee funding: Winter 2022 to 2023

MS Excel Spreadsheet, 38.2 KB

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Details

This is a one-off publication, explaining how the Contracts for Difference (CfD) scheme reduced the need for government funding of the Energy Price Guarantee (EPG) by £18 per household during the winter of 2022 to 2023.

Ofgem’s price cap sets the maximum unit rate and standing charge for standard variable (default) tariffs for a typical household in Great Britain. The price cap methodology has a component to account for the impact of CfDs within the electricity wholesale cost allowance.

The EPG was delivered through a payment by government to energy suppliers for the difference between the benchmark cost (the price cap) of buying and supplying the energy to their customers and the EPG. As such, over Winter 2022 to 2023, the CfD component of the price cap reduced the difference between the EPG and the price cap, and thus the amount of government spending towards the EPG, by £18 per typical customer.

This file calculates the impact of the CfD scheme on the price cap methodology using routinely published price cap data.

Published 22 November 2024