‘Big Six’ still concerned over Contracts for Difference

The ‘Big Six’ are still concerned about elements of the Government’s Contracts for Difference (CfD) proposal for the energy Bill. They made their objectives clear at a hearing in front […]

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By Priyanka Shrestha

The ‘Big Six’ are still concerned about elements of the Government’s Contracts for Difference (CfD) proposal for the energy Bill.

They made their objectives clear at a hearing in front of the Energy and Climate Change Committee this morning discussing the electricity market reform.

The CfD is a long term plan to provide stable and predictable incentives for businesses to invest in all forms of low carbon electricity generation.

Sara Vaughan, Director of Strategy and Regulation at E.ON said although the company welcomes the concept, there is “no magic in CfDs.” She suggested more clarity is needed as it has not been decided who the counterparty will be.

However, she told ELN she believes the CfD mechanism can be made to work and it could help in taking the market forward: “If we look at the market as it currently stands, we require change in the market in order to ensure that people do continue to invest. So while we have some concerns around the details of the CfD, we certainly believe that it represents a workable mechanism within which companies like ours could invest.

“With the CfD, it effectively fixes the price that investors are going to receive per megawatt/hour of electricity.”

The preferred option for suppliers is to have the Government guarantee the contracts.