CfD Standard Terms and Conditions
Page type: primary-anchored (mirrors CfD Standard Terms and Conditions Version 7)
Last updated: 2026-04-05
Source file: sources/lccc/cfd-standard-terms.md
The CfD Standard Terms and Conditions are the contract terms that govern every FiT Contract for Difference between the Low Carbon Contracts Company (LCCC, as "CfD Counterparty") and CfD generators. Issued by the Secretary of State under section 11(1) of the Energy Act 2013, they are the commercial backbone of the CfD regime -- the rules that determine how generators get paid.
The current version is Version 7 (24 July 2025), applicable from Allocation Round 7 onwards.
How CfDs work (from the contract)
The contract creates a two-way payment flow based on the "Difference" between the Strike Price and the Market Reference Price:
- Difference = MIN(Strike Price - Market Reference Price, Strike Price) [Condition 1.1]
- When wholesale price < Strike Price: LCCC pays the Generator a top-up (the Difference Amount is positive)
- When wholesale price > Strike Price: the Generator pays LCCC back (the Difference Amount is negative)
- During Negative Price Periods: the Difference Amount is zero -- no payment either way
The Strike Price is CPI-indexed annually (Condition 14), adjustable only through specific contractual mechanisms: QCiL compensation (Part 8), Generation Tax (Part 9), TLM(D) (Part 10).
Payment calculation tracks
The contract has two tracks, depending on the technology:
Baseload Technologies (Part 5A): For technologies with predictable output (biomass, CHP, nuclear, etc.). Market Reference Price is based on forward season contracts from LEBA and NASDAQ indices, calculated seasonally. Baseload Difference Amount includes multipliers for RQM, CHP Qualifying Multiplier, TLM, and ACT Efficiency Multiplier [Condition 9 formula].
Intermittent Technologies (Part 5B): For technologies with variable output (wind, solar, tidal, wave). Market Reference Price is the day-ahead hourly auction price from APX/N2Ex, calculated per Settlement Unit. Simpler formula without RQM/CHP multipliers [Condition 17 formula].
Contract lifecycle
Pre-Start Date
- Agreement Date: CfD Agreement signed. Agreement Date Provisions take effect immediately [2.1(A)].
- Initial Conditions Precedent: Must be fulfilled within 20 Business Days [3.3].
- Milestone Requirement: Generator must demonstrate spend of 10% of Total Project Pre-Commissioning Costs (or compliance with Project Commitments) by Milestone Delivery Date [4.1].
- Operational Conditions Precedent: Must be fulfilled before the Longstop Date [3.6]. Include commissioning tests, metering setup, generation licence, grid connection.
- Start Date Notice: Generator notifies proposed Start Date within 10 Business Days of final CP fulfilment [3.21]. Alternatively, LCCC may issue Unilateral Commercial Operations Notice [3.26A].
- Start Date: Payments begin.
During the Term
- LCCC delivers daily Billing Statements (7 Business Days after each Billing Period) [22.2]
- Net Payable Amount = Aggregate Difference Amount + Reconciliation Amounts + Compensatory Interest [22.7]
- Generator pays negative amounts within 10 Business Days [23.1]; LCCC pays positive amounts within 28 calendar days [23.2]
- Annual CPI indexation of Strike Price effective 1 April [14.3]
- Change in Law compensation regime available for Qualifying Changes in Law [Part 8]
- Generation Tax compensation available for generator-specific taxes [Part 9]
Termination
Five routes, all exercised by LCCC only [51.12]:
| Route | Trigger | Consequence |
|---|---|---|
| Pre-Start Date (51.1) | Milestone/CP failure, Termination Event, planning consent issues | No payment, clean break [52.2] |
| Default (51.6) | Termination Event on/after Start Date | Generator pays Termination Amount [52.4-52.5] |
| QCiL (51.8) | QCiL Construction/Cessation Event | QCiL Compensation survives [52.7] |
| QCiL Compensation (51.10) | QCiL where Condition 34.3 applies | QCiL Compensation survives [52.7] |
| SCiL Compensation (51.11) | Sustainability Change in Law | SCiL Compensation survives [52.8] |
Generator obligations
The contract imposes substantial obligations on the Generator:
- Comply with all Laws, Industry Documents, and Required Authorisations [30.1(A)-(C)]
- Maintain ownership of the Facility from Start Date [30.1(E)]
- Ensure correct generation technology at all times [30.1(F)]
- Metering obligations: BSC-compliant metering, accurate recording, no co-located electricity storage without conditions [31.1]
- No subsidy cumulation: warrant no other subsidy received (32.4), undertake none will be (32.5), repay any that is (32.5(C))
- Information provision: extensive reporting obligations [32.1]
- Physical Separation Requirement (ACT only): Synthesis and Combustion Chambers must be physically separated [32A.2]
Change in Law protection
The contract protects generators against post-Agreement-Date changes in law through three complementary regimes:
-
Qualifying Change in Law (Part 8, Conditions 33-38): Covers Discriminatory, Specific, and Other Changes in Law that are not Foreseeable. Compensation via five categories (Opex, Capex, Adjusted Revenues, Construction Event, Operations Cessation Event), each with NPV-based formulae.
-
Generation Tax (Part 9, Conditions 42-44): Separate regime for taxes imposed specifically on electricity generators. Independent Energy Consultant determines compensation. Anti-double-compensation with Part 8 [44.3].
-
Curtailment (Part 11, Conditions 48-50): Compensation for "Qualifying CPC Events" -- curtailment caused by changes in law affecting system dispatch. Does not cover standard Balancing Mechanism curtailment. Applies to exclusion of Part 8 [50.1].
Key Version 7 changes (AR7)
- Clean Industry Bonus (Schedule 2): New supply chain reward mechanism for Offshore Wind
- Floating Offshore Wind provisions: Separate treatment throughout (Conditions 1.16-1.17, 5.10, 51.1(F))
- ACT Efficiency Multiplier (Condition 12A): New multiplier for Advanced Conversion Technology
- Physical Separation Requirement (Condition 32A): For ACT facilities, with PSR Audit Right and termination events
- Unilateral Commercial Operations Notice (Condition 3.26A): LCCC can deem Start Date
- KYC provisions (Conditions 32.1A, 79.10): Know Your Customer requirements
- Subsidy Control Act 2022 alignment: Updated from EU State aid framework
Connections to other instruments
| Instrument | Relationship |
|---|---|
| Energy Act 2013 | Statutory basis: s.11(1) (standard terms), s.14 (offer to contract), s.6(2) (CfD definition) |
| CfD (Allocation) Regulations 2014 | Allocation framework (per-round) |
| Generation Licence | Generator must hold; Required Authorisation |
| BSC | Metering standards; settlement data; TLM data; imported terms |
| Grid Code | Operating obligations cross-referenced |
| CUSC | Connection and use of system |
| ESO Licence / NESO Licence | Defines BSC, CUSC, Grid Code, SOTO Code |
| Subsidy Control Act 2022 | Defines "Subsidy"; governs non-cumulation regime |
| LCIA Arbitration Rules | Dispute resolution mechanism |
Defined terms
The Conditions contain 300+ defined terms in the 71-page definitions section (Condition 1). The full register is in the source file. Key terms include: Difference, Strike Price, Market Reference Price, Metered Output, Net Payable Amount, Qualifying Change in Law, Termination Amount, Installed Capacity, Reasonable and Prudent Standard.
Character positions
No character positions recorded yet. This section will be populated when secondary sources commenting on the CfD Standard Terms are ingested.