CfD Allocation Framework

Page type: primary-anchored (mirrors CfD Contract Allocation Framework AR7/7a, July 2025)

Source file: ~/knowledge/sources/desnz/cfd-allocation-framework.md

What this instrument does

The Contract Allocation Framework sets the rules that govern how Contracts for Difference are allocated to renewable electricity generators in Great Britain. It is published by DESNZ for each allocation round. The current version covers Allocation Rounds 7 and 7a (July 2025).

The Framework operates under the CfD (Allocation) Regulations 2014 (as amended) and the Energy Act 2013. In any conflict between the Regulations and the Framework, the Regulations prevail (Rule 30.1).

The Delivery Body (NESO, the GB System Operator) runs the allocation process. LCCC (the CfD Counterparty) then enters into CfD Agreements with successful applicants.

How the allocation process works

1. Eligibility (Rules 3-5)

The Delivery Body checks each application against Schedule 5 criteria (Rule 3.2). If all checks pass, a Qualifying Application is presumed (Rule 3.3), unless credible evidence suggests otherwise (Rule 3.4).

Key exclusions (Rule 5): - No application for a unit that is already part of a Commissioned generating station, unless it is a Repowered CFD Unit (onshore wind, >5MW, existing station at end of 25-year life) (Rules 4.1(h), 5.1(a)) - No application where the unit was subject to an AR1-6 CfD and capacity was subsequently surrendered (Rule 5.1(b)) - No application for Unconsented Fixed-Bottom Offshore Wind where planning consent has been refused and the refusal stands (Rule 5.2)

2. Supplemental requirements (Rule 4)

Technology-specific requirements beyond basic eligibility: - Phased Offshore Wind: max 1500 MW total after all phases; first phase >= 25% of total; first phase by 31 March of last Delivery Year; final phase within 2 years of first (Rule 4.1(a)) - Biomass/EfW with CHP: must acknowledge CHPQA Certificate as Further Condition Precedent; CHPQM applies (Rule 4.1(b)) - ACT: must demonstrate Physical Separation Requirement compliance (Rule 4.1(c)) - Private Network CfD: must be a Private Network Generator; must not supply electricity to an Offshore Installation (Rules 4.1(d-e)) - Offshore Wind: must connect to Transmission System in Generation UoS Tariff Zones 13-27 or Distribution System in DNO Areas 10-16 or 19-23 (Rule 4.1(i)) - Offshore Wind Scotland: Transmission System in Tariff Zones 1-12 or Distribution System in DNO Areas 17-18 (Rule 4.1(j)) - Unconsented Fixed-Bottom Offshore Wind: must show no refusal of Applicable Planning Consents at time of application (Rule 4.1(k))

3. Valuation (Rule 6, Schedule 2)

Applications are valued using the Valuation Formula (Schedule 2) in 2024 prices:

Budget impact = (Strike Price - Reference Price) x Load Factor x YR1F x Capacity x (Days x 24) x (1 - TLM) x RQM x CHPQM

Where negative, budget impact is zero (i.e. no "credit" for technologies already below market price).

4. Contract Allocation Process (Rule 10)

If all qualifying applications fit within the Monetary Pot/Budget and any Pot Capacity Cap/Overall Capacity Cap, they are all Successful Applications at the Administrative Strike Price (Rules 10.3(a), 10.4(a)).

If applications would exceed the budget, an auction is held (Rules 10.3(b), 10.4(b)). Minimum auctions run first (Rule 17.1), in the order specified by the Contract Budget Notice (Rule 17.2).

5. Auction mechanics (Rules 11-12, 18-20)

• Notice of Auction: Submission Opening Date >= 10 Working Days; Closing Date >= 15 Working Days after Notice (Rule 11.2)
• Sealed bids: Strike Price in GBP/MWh (2024 prices), not exceeding ASP; Target Dates; capacity (Rule 12.1)
• Flexible Bids: up to 4 per application with varying price/capacity/dates, but not available to Fixed-Bottom Offshore Wind (Rules 12.5-12.6)
• Ranking: bids ranked lowest to highest Strike Price, regardless of Delivery Year (Rules 18.3, 19.3)
• Clearing: pay-as-clear -- all successful applicants receive the Strike Price of the marginal bid, capped at the relevant ASP
• Interleaving: when a bid would breach the budget, bids from other applicants at the same or lower price are considered before Flexible Bids from the original applicant (Rule 19.6)

6. Soft Constraints (Rule 16)

A Soft Constraint allows a capacity-expressed limit (Pot Capacity Cap, Overall Capacity Cap, Minimum, Maximum) to be exceeded in the auction. Key restrictions: - Never applies to monetary limits (Rule 16.1(a), 16.1(f)) -- the Monetary Pot/Budget is a hard ceiling - Does not apply during the initial Contract Allocation Process steps (Rule 10.2) - Does not apply in tiebreakers (Rule 21.1)

7. Tiebreakers (Rule 21)

When two or more bids at the same Strike Price cannot all be successful because a limit would be breached: - Any application that alone would breach the limit is unsuccessful (Rules 21.2(a), 21.5(a), 21.7(a)) - The combination closest to fulfilling the budget in the final year of the Budget Profile wins (Rules 21.2(b), 21.5(b), 21.7(b)) - If equally close, the Delivery Body chooses at random using an electronic process (Rules 21.2(c), 21.5(c), 21.7(c))

8. Notifications and post-auction (Rules 22-25)

• Qualification notice within 22 Working Days (Rule 7.1)
• Non-Qualification Review within 5 Working Days; Delivery Body responds within 10 Working Days; Qualification Appeal to Ofgem within 5 Working Days (Rule 8.1)
• CfD Notification to LCCC includes Target Commissioning Date, capacity, connection type, coordinates, applicable Standard Terms (Rule 24.1)
• Pending Applications succeed if their bid is at or below the clearing price (Rule 25.1)

Key data: Administrative Strike Prices (GBP/MWh, 2024 prices)

(Full table of 15 technologies in source file.)

Key data: Reference Prices (GBP/MWh, 2024 prices)

(Full table in source file.)

New features in AR7

1. Unconsented Fixed-Bottom Offshore Wind -- projects without full planning consent can now apply (Rules 3.6, 4.1(k), 5.2), subject to Director's declaration that no refusal is in effect (Rule 15.4, Schedule 7)
2. Repowered CFD Units -- onshore wind repowering explicitly accommodated (Rule 4.1(h)); existing station must be at/near end of 25-year operating life
3. Offshore Wind Scotland -- separate Technology Type for tariff zone eligibility (Rule 4.1(j)), but treated as Offshore Wind for pricing and scheduling
4. Private Network CfD Agreements -- new category for behind-the-meter generators (Rules 4.1(d-e))
5. Fixed-Bottom Offshore Wind excluded from Flexible Bids (Rule 12.5) -- a single-price-point requirement for the largest projects
6. Anonymised Bid Information -- AR7 applies only to Fixed-Bottom Offshore Wind; SoS sees the spread of bids before auction clearing (Rule 13.1)
7. 2024 price base -- first round to use 2024 prices instead of 2012

Defined terms

See the full defined-terms register in the source file. Key terms: - "Contract Allocation Framework" now explicitly means the part dealing with matters "other than Clean Industry Bonus" (reflecting the new CIB framework for AR8) - "Eligible Repowering Technology" is defined as onshore wind only - "Soft Constraint" can only be applied to capacity-expressed limits, never to monetary limits

Document hierarchy

CfD (Allocation) Regulations 2014 and Eligible Generator Regulations prevail over the Allocation Framework in any conflict (Rule 30.1). The Framework in turn sets rules for the Delivery Body and Applicants that supplement the Regulations.

Character positions

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Last updated: 2026-04-06