Trade bodies highlight risks of CfDs

Renewable trade bodies in the UK have called on the Government to provide more clarity in the Energy Bill as the draft is not clear and could pose big “risks”. […]

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By Priyanka Shrestha

Renewable trade bodies in the UK have called on the Government to provide more clarity in the Energy Bill as the draft is not clear and could pose big “risks”.

They made their objectives clear to the Energy and Climate Change Committee at a second hearing yesterday about the electricity market reform.

Dr Gordon Edge, RenewableUK’s Director of Policy said the Bill does not contain sufficient information for investors to gain confidence for low-carbon investments. He said the Contracts for Difference (CfD) is key in giving certainty to investors but needs some change and clarity for it to work.

The CfD provides a long term plan for stable and predictable incentives for businesses to invest in low carbon electricity generation.

He said: “DECC’s current proposals are throwing in lots of additional risks which are unnecessary and adds no benefit…The proposal to have a round every six months where people can come forward and apply for CfD where you may not get one adds an additional risk, whereas a more open first-come first-served clarity makes things better.”

Gaynor Hartnell, Chief Executive of Renewable Energy Association was also concerned about limiting the risk of CfDs: “The main importance is making sure the CfDs are bankable and the counterparty issues have got to be addressed… The allocation process for contracts has to be understandable, transparent and fair and that’s an enormous challenge. There must be no unnecessary risks for the generators with the CfD after they are awarded them as well.”