CfD Stakeholder Bulletin — 9 December 2021
Summary
LCCC published guidance explaining how BSUoS charge removal would affect CfD Allocation Round 4 strike prices. If Ofgem implements CMP308 to remove BSUoS charges from generation, CfD strike prices would be adjusted downward to maintain generator revenues. The guidance provides worked examples for developers ahead of Ofgem's consultation closing 19 January 2022.
Why it matters
This creates contingent adjustments rather than pricing reform — CfD generators remain insulated from BSUoS exposure regardless of Ofgem's decision. As such, the mechanism preserves revenue certainty for renewables while potentially shifting BSUoS costs to demand, maintaining the subsidy's effectiveness but not addressing underlying cost allocation.
Key facts
- •Guidance covers CfD Allocation Round 4 applications
- •References Ofgem CMP308 consultation closing 19 January 2022
- •Strike prices would adjust downward if BSUoS removed from generation
Timeline
Areas affected
Related programmes
Memo
Contracts for Difference: Stakeholder Bulletin 9 December 2021 Balancing Services Use of System Charges Explanatory Note The Low Carbon Contracts Company (LCCC) and the Department for Business Energy and Industrial Strategy (BEIS) have today published an explanatory note on the treatment of Balancing Services Use of System (BSUoS) charges (PDF, 262KB) in the fourth Contracts for Difference (CfD) allocation round (AR4). This follows the policy decision on the treatment of BSUoS charges confirmed in the government response to the consultation on further drafting amendments to the CfD contract and the note accompanying the AR4 Budget Notice, both published by BEIS on 25 November 2021. The explanatory note is intended for the information of developers of renewable electricity generating stations planning to participate in AR4. It contains illustrative worked examples to help potential applicants understand the practical implications for strike prices awarded through AR4 if Ofgem decides to implement proposed modifications to the Connection and Use of System Code on the removal of BSUoS charges from generation (code modification CMP308). Ofgem published its ‘minded to’ consultation on the code modification on 8 December 2021, with a closing date of 19 January 2022. Enquiries about Ofgem’s consultation should be directed to Ofgem. Any enquiries concerning the explanatory note can be submitted via the AR4 microsite. UK General Data Protection Regulation This stakeholder bulletin is being circulated to people who have opted in to the Contracts for Difference stakeholder contact list. We issue these stakeholder bulletins as a convenience to interested parties, however it is not in any way essential to be on this list to participate in major consultations or allocation rounds. Purpose & scope of this list: This list is managed by the Department for Business, Energy and Industrial Strategy (BEIS) (and any successor departments) and will be used to inform interested parties of policy developments relevant to the Contracts for Difference scheme for renewable energy projects (and any direct successor schemes). It is not used for any other purposes. To be removed from the circulation list: Please send a blank e-mail with the subject ‘opt out’ (if the receiving e-mail you use is different to the one you send the e-mail from, include that e-mail address in the subject of the e-mail) to BEISContractsForDifference@beis.gov.uk. If you have received this indirectly and want to be added to this list: Send a blank e-mail with the subject line ‘opt in’ to BEISContractsForDifference@beis.gov.uk. You can withdraw your consent to opt in at any time. We will normally keep your address on this list until you: a) withdraw your consent to opt in, b) the scheme closes without any successor, c) we receive reports your email address is no longer operational, or d) you do not respond to a periodic request from us to reconfirm your desire to opt in.