DECC seeks views on extending CfD disincentive

The government is proposing to exclude Contracts for Difference (CfD) projects from participating in future auction rounds for a longer period if they fail to deliver. It plans to extend […]

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By Priyanka Shrestha

The government is proposing to exclude Contracts for Difference (CfD) projects from participating in future auction rounds for a longer period if they fail to deliver.

It plans to extend the exclusion period from 13 months to 24 months.

The Non-Delivery Disincentive (NDD) aims to incentivise applications that are likely to be delivered and ensures those that are awarded a contract in a CfD allocation round sign it and make their best efforts to meet the Milestone Delivery Date (MDD).

The exclusion – which is currently for 13 months from the date of the CfD notification – applies to those that fail to sign the contract or terminate prior or due to a failure to meet its MDD.

The aim is that those sites would be prevented from entering the next CfD round.

As allocation rounds have not occurred as frequently as expected, DECC believes it is necessary to consider updating the exclusion period as the current one is “less likely to be effective”.

It also proposes to amend regulations to make clear the project excluded under non-delivery is either whole or part of an eligible generating power station.

DECC states: “In the case of (for example) a CfD for a wind farm extension, the policy is that the site of the extension only, not the site of the entire wind farm including the extension, would be excluded in the event of a breach of the NDD.”

It is inviting views on the proposals until 22nd June from projects planning on participating in future CfD allocation rounds.

Last week, new research claimed householders could be paying nearly £105 more for energy every year by 2020 as a result of government policies, including the CfDs.

Earlier this year the competition watchdog highlighted a number of failings within the CfD auction scheme.