CfD (Allocation) Regulations 2014

Page type: primary-anchored (mirrors The Contracts for Difference (Allocation) Regulations 2014, SI 2014/2011)

Last updated: 2026-04-05

Source file: ~/knowledge/sources/legislation/uk/si-2014-2011-cfd-allocation.md

What this instrument does

The Contracts for Difference (Allocation) Regulations 2014 (SI 2014/2011) set out how Contracts for Difference are competitively allocated to low-carbon electricity generators in England and Wales. They are the procedural backbone of the CfD regime, governing how allocation rounds are established, how applications are assessed, how budgets are set, and how the competitive auction determines strike prices.

The Regulations were made under the Energy Act 2013 (ss.6(1), 10, 12(1)-(3), 13(2),(3),(8), and 19) and came into force on 1 August 2014. They have been amended multiple times since, most significantly by SI 2024/710 which added sustainable industry rewards for allocation rounds 7-9.

The instrument creates a three-body system: the Secretary of State (DESNZ) sets the rules, budgets, and strike prices; the delivery body (NESO) runs the allocation process; and the Authority (Ofgem/GEMA) hears qualification appeals and enforces delivery body obligations.

Two companion SIs complete the CfD legislative framework: the CfD (Definition of Eligible Generator) Regulations 2014 (SI 2014/2010) defines who can participate, and the CfD (Standard Terms) Regulations 2014 defines the contract terms.

Part 1: Introduction (Regs 1-2)

The Regulations apply to England and Wales, except Part 10 which extends to Northern Ireland (for directed CFDs). Over 60 terms are defined in Regulation 2, with several importing definitions from the companion SIs and the Electricity Act 1989.

Key definitions: a "CFD unit" is the whole or part of an eligible generating station. A "strike price" is a price per MWh. A "delivery year" runs April to March, with the final delivery year ending 31 March 2035. This is a built-in sunset for the allocation regime.

Part 2: Allocation rounds and frameworks (Regs 3-9)

The Secretary of State establishes allocation rounds by notice to the delivery body and CFD counterparty (Reg 4). For each round, an application window must be established (Reg 4A) with a minimum duration of 10 working days. The opening date must be at least 10 working days after notice.

Each allocation round requires a contract allocation framework (Reg 6) specifying the allocation process and valuation methodology. Since 2024, rounds 7-9 may also have a sustainable industry reward allocation framework assessing supply chain contributions. Framework requirements must be achievable by the delivery body (Reg 6(3)), and the Regulations override any inconsistent framework provisions (Reg 6(4)).

Frameworks must be published at least 10 working days before applications open (Reg 7).

Part 3: Budgets (Regs 10-13B)

The Secretary of State sets administrative strike prices via a price notice (Reg 10A) and contract budgets via a budget notice (Reg 11). Budgets may be expressed as money, capacity, or both, and may be divided into "pots" for different technology categories.

A crucial asymmetry: budget revisions may increase the contract budget but may never decrease it (Reg 12). Maxima and minima cannot be reduced, and any increase to them requires at least a proportional budget increase. This one-way ratchet protects applicants from budget being cut after they have committed resources to the allocation process.

Part 4: Applications (Regs 14-28E)

Exclusions (Chapter 1)

Applications are excluded for (Reg 14): CCS systems, nuclear, hydro ≤5MW, small renewables ≤5MW (anaerobic digestion, solar PV, onshore wind), generators with existing RO accreditation or FiT registration, phased offshore wind (except designated projects), units in or adjacent to Northern Ireland, units previously funded under Non-Fossil Fuel Orders, units with active CFDs or capacity agreements, units without required separate metering, and units with investment contracts.

A decommissioning replacement exception (Reg 14ZA) allows bypass of several exclusions where capacity replaces decommissioned stations.

Sites where a previous CFD offer lapsed or contract was terminated face a two-year site exclusion (Reg 14A), waivable only by exemption certificate from the Secretary of State.

Qualification (Chapters 2-4)

Only eligible generators may apply (Reg 16). The delivery body assesses applications and notifies qualification decisions within 10 working days of the application closing date (Reg 19). Non-qualifying applicants may request review within 5 working days, with the delivery body responding within 10 working days (Reg 20).

General qualification requirements: applicable planning consents (Reg 23) and a connection agreement securing at least 75% of the provisional capacity estimate (Reg 25).

Additional requirements apply to specific technologies: offshore wind must show a Crown Estate lease or agreement for lease (Reg 27); floating offshore wind must use floating foundations in waters of at least 45 metres depth (Reg 27ZA); remote island wind must have at least 50km electrical connection with at least 20km subsea (Reg 27A); projects of 300MW or more require a supply chain statement (Reg 26); and AR7-AR9 offshore wind requires a sustainable industry reward statement (Reg 27B).

Sustainable industry rewards (Chapter 5)

Added by SI 2024/710. Eligible generators applying in rounds 7-9 must submit sustainable industry reward applications to the Secretary of State (Reg 28A), who assesses supply chain development contributions against minimum standards. Approved statements specify reward entitlements and obligations. The Secretary of State cannot disclose commercially sensitive application information (Reg 28D).

Part 5: Contract allocation process (Regs 29-40)

The delivery body determines application valuations per the framework methodology (Reg 29). The allocation process must not exceed the contract budget, must automatically award applications meeting minimum thresholds at the administrative strike price, and must apply competitive bidding to determine strike prices for remaining applications (Reg 30).

The process commences when all qualification reviews and appeals are resolved, or when the Secretary of State directs commencement despite pending appeals (Reg 33). If commencement is delayed more than 5 months past the application closing date, applicants may request target date postponement (Reg 34).

An independent audit of allocation calculations is mandatory both pre-commencement and post-completion (Reg 36). The delivery body submits the audit report to the Secretary of State with 2 working days' notice of intent to proceed or re-run (Reg 37). The Secretary of State may direct a re-run or halt within 2 working days (Reg 38).

If the 5-month delay period expires without any proceed or re-run notice, a full re-run is automatic (Reg 40).

Part 6: CFD notifications (Regs 41-42)

The delivery body issues CFD notifications including the final strike price. Phased offshore wind projects receive separate notifications per phase.

Part 7: Qualification appeals (Regs 43-48)

Applicants may appeal non-qualification to the Authority (Ofgem) within 5 working days of the review notice (Reg 43). The Authority determines appeals as soon as practicable (Reg 46), either upholding the determination or declaring the applicant qualifying. Further appeal lies to the High Court or Court of Session on a point of law, within 28 days (Reg 47). The delivery body maintains a public register of appeals (Reg 48).

Part 8: Pending applications (Regs 49-53)

Where an applicant's qualification appeal is undetermined when the allocation process starts, their bid is sealed. The delivery body must enable bidding but must not view or apply the bid (Reg 50). If the appeal succeeds post-allocation, the pending application is assessed against the framework and may receive a CFD notification even if this exceeds the contract budget (Reg 51). If the appeal fails, the bid is destroyed.

Part 9: Reports and enforcement (Regs 54-56)

The delivery body provides allocation reports to the Secretary of State, including details of all applicants, qualifying applicants, successful applicants, final strike prices, and valuations (Reg 54). Strike price bid data may only be provided in anonymised form. Requirements on the delivery body are enforceable under Electricity Act 1989, s.25 (Reg 55).

Part 10: Northern Ireland directions (Regs 57-61)

Part 10 provides for directed (non-competitive) CFDs in Northern Ireland under Energy Act 2013, s.10. The Secretary of State's direction must be in writing, specify a compliance date at least 20 working days away, and specify the offer period (Reg 57). The CFD counterparty must publish the resulting contract, and strike prices and reference prices cannot be withheld as confidential (Reg 60).

Key thresholds

Defined terms

See source file for complete register. Key terms: "CFD unit" (whole or part of an eligible generating station), "strike price" (price per MWh), "contract budget" (total sum payable per delivery year), "delivery body" (NESO), "final strike price" (post-allocation strike price), "successful application" (one receiving a CFD notification).

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