Out-Law News 1 min. read

UK renewable energy subsidy auctions to get underway earlier than expected


Renewable energy projects seeking to bid for a share of the UK government's new subsidy scheme will be invited to submit their plans next week, it has emerged.

The first competitive auction process for contracts for difference (CfD) subsidies will open on 29 January and run for just one week, according to an updated implementation plan published by the body responsible for administering the scheme (21-page / 652KB PDF). The bidding window was previously due to run for two weeks from 18 February, but has been brought forward after appeals by investors that were prevented from competing were completed ahead of schedule, according to the document.

Successful applicants will be notified of awards under the scheme on 26 February, and contracts will have to be signed by 27 March, according to the latest implementation plan. However, the anticipated date of first payments under the scheme remains 29 April.

The Department of Energy and Climate Change (DECC) has set up the Low Carbon Contracts Company as a wholly-owned private company to manage the new scheme.

CfDs will begin replacing existing incentives for renewable energy generation from this year, with the Renewables Obligation (RO) due to be phased out entirely by 2017. The contracts will provide guaranteed payments to operators of approved renewable generation technology at a pre-agreed 'strike price', while enabling the system operator to 'claw back' money when market prices exceed this rate.

During the auction window, projects involving 'established' technologies will submit sealed bids containing the lowest guaranteed price they would accept per megawatt hour (MWh) of electricity generated. Awards will be made on a technology-neutral basis to the lowest bidders. Onshore wind, solar photovoltaic (PV), energy from waste with combined heat and power (CHP), hydro, landfill gas and sewage gas have been classed as 'established technologies' for the purposes of the scheme.

Projects using 'less established' technologies will be able to apply for a separately-allocated share of the total CfD budget, but will not be expected to compete on price.

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