CfD Stakeholder Bulletin — 9 February 2022
Summary
CfD allocation rounds will be held annually from March 2023, replacing the previous two-year cycle. The fifth allocation round will open in March 2023. The government made this decision following an internal review that concluded annual auctions accelerate deployment and increase market confidence.
Why it matters
This creates more frequent price discovery for renewable projects, reducing the option value of waiting that previously encouraged developers to hoard sites between biennial rounds. Annual auctions favour projects with shorter development timelines and reduce the competitive advantage of developers with deeper balance sheets who could afford longer waits.
Key facts
- •Fifth allocation round opens March 2023
- •Previously held every two years
- •Applies to offshore wind, onshore wind, solar PV, tidal stream, floating offshore wind
Timeline
Areas affected
Related programmes
Memo
Contracts for Difference: Stakeholder Bulletin 9 February 2022 Contracts for Difference allocation rounds to be held annually from March 2023 The government has announced today that Contracts for Difference (CfD) allocation rounds will be held annually from March 2023 – when the fifth allocation round will open to applications. The announcement was made in a written ministerial statement to Parliament this morning, followed by a government press release. Previously, CfD auctions had been held every two years. The decision to move to annual auctions comes following the outcome of an internal review of the frequency of CfD auctions, which the government agreed to undertake in the Net Zero Strategy. The review found that annual CfD allocation rounds can help accelerate the deployment of low- carbon electricity generation, increase market confidence and support investment in the sector. More frequent CfD rounds will support the delivery of renewable technologies identified in the Net Zero Strategy as key to decarbonising the power sector, such as low-cost offshore wind, locally supported onshore wind, and solar PV. At the same time, greater auction frequency will provide a stable platform for emerging technologies – including tidal stream and floating offshore wind – to demonstrate their scalability and cost-efficiency. 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.