Out-Law News 2 min. read
08 Sep 2016, 2:53 pm
It will amend the relevant regulations, under which delivery 'windows' for support only run until 31 March 2020, following unanimous support for a consultation on the plans. The government had already allocated £730 million to the scheme over the period between 2021 and 2026 as part of its most recent budget and spending review, making the consultation a formality, according to energy law expert Nick Shenken of Pinsent Masons, the law firm behind Out-Law.com.
"It's perhaps unsurprising that consultation respondents have unanimously agreed with the proposal to extend the delivery years in which CfD budget can be allocated, and industry will welcome the certainty this will bring," Shenken said.
"Developers will, however, still be eagerly awaiting further certainty on when allocation rounds will actually take place, the delivery years to which they will apply and what funding will be available for allocation over the extended period," he said.
The government received 24 responses to its consultation on its proposed amendment, all of which were in favour and none of which raised new issues relevant to the questions asked, according to its consultation response. However, some used the opportunity to provide additional comments on delivery years and the CfD scheme as a whole, which were outside the scope of the consultation, the government said.
Although the amendment will allow for delivery years up to 2025/26, it does not specify the years in which any CfD allocation round must be run. The majority of respondents that provided additional views on this topic suggested that funding allocation rounds should be limited to the years 2021/22 and 2022/23, according to the government's response. This would make more of the budgeted funding available for allocation over these years, but would bring the scheme to an end before the date provided for by the legislation.
Some respondents also raised concerns about the lack of clarity around the current CFD timetable, technological eligibility requirements and budget volumes, according to the response. Comments were also made about the environmental impact of supporting deep water offshore renewables through the programme; the inclusion of onshore wind based on remote islands as a separate technology meriting a separate level of support; and the potential need for a "non-UK CfD" to support certain projects. These responses "will be taken into account as the government considers further development" of the CfD programme, it said.
CfDs are a significant part of the UK government's programme of electricity market reform, through which it aims to incentivise up to £110 billion in energy investment over the next decade. The contracts provide guaranteed payments to operators of approved renewable generation technology, calculated with reference to a technology-dependent 'strike price' and a market reference price, and enable the system operator to claw back money when market prices are high.
Only 'less established' generation technologies, including offshore wind, will be entitled to participate in the CfD allocation process from the next allocation round onwards. 'Established' technologies, such as onshore wind and solar photovoltaic (PV) power, will not be eligible for this round.