This consultation enables stakeholders to offer their views on current regulatory activities led by DECC and the OGA and how they interact with energy sector innovation. For more information, please see here.
Supplier Obligation Interim Levy Rate and Total Reserve Amount – 1 April 2016 – 30 June 2016
We can now confirm that the Interim Levy Rate for the Fifth Quarterly Obligation Period, to run from 1 April 2016 to 30 June 2016, will be set at £0.00/MWh and the Total Reserve Amount at £0.00
In arriving at its decision on the Interim Levy Rate and Total Reserve Amount, LCCC has considered the potential for CFD payments to be required to be made to CFD Generators under the existing CFDs and Investment Contracts.
Adjusted Interim Levy Rate
Low Carbon Contracts Company (LCCC) have adjusted the Interim Levy Rate to zero (£0.000 per MWh), effective from 21 January 2016, for the quarterly obligation period 1 January 2016 to 31 March 2016. LCCC has taken this action because it now believes it is highly unlikely that there will be any CFD generation to pay by 31 March 2016. EMR Settlement (EMRS) will be issuing a notice and circular on behalf of LCCC further detailing this adjustment and the Interim Levy Rate and Total Reserve Amount.
DECC published, on 17 December, an updated draft* of the CFD Standard Terms and Conditions, alongside various CFD Agreements. The updated draft terms, which do not apply to CFDs already allocated, shows the changes made to the contract compared with the version consulted on in March 2015, and reflect the positions set out in the government response published in June 2015, e.g. amendments relating to negative pricing and the Milestone Requirement Notice.
The updated draft is available on the government website.
*Please note that the updated draft remains a “draft” until it is issued together with an allocation round notice.
The second Capacity Market auction starts today, Tuesday 8th December, and there will be four auction rounds each day until the auction clears.
The Government is seeking to procure 44.7GW for delivery in 2019/20. A further, one-year ahead auction, also for delivery in the winter of 2019/2020, will be held in 2018 to top-up the amount procured to the 2019/2020 target. Further auctions are expected to be held for future delivery years on a rolling basis. The latest the auction could finish is the last auction round on Friday 11th December. The auction is managed by National Grid, and for more information please see here or use the National Grid portal to stay up to date. For DECC's original announcement, please see here.
Lynemouth is one of several projects provided with an investment contract under the Final Investment Decision Enabling for Renewables (FIDeR). The European Commission has announced that this UK support does in fact comply with state aid rules. The Commission agreed that the project furthers the UK low carbon energy agenda without overly influencing competition.
The Commission has already approved a number of FIDeR projects, and in December of last year the UK notified the EU commission of plans to subsidise the conversion of the coal-fired Lynemouth power plant to biomass. The UK Government intends to support the project with a Contract for Difference. The project is expected to generate about 2.3 TWh of low-carbon electricity per year once operating. The plant is due to use approximately 1.5 million tonnes of wood pellets per year, mainly sourced from the United States, Canada and Europe.
The non-confidential version of the decision will be published in the State aid register on the competition website under the case number SA.38762 once eventual confidentiality issues have been resolved. For more information, please see the European Commission's release.
Electricity Settlements Company have published the ESC Annual Performance Report. This can be viewed here
You may be aware that the Department of Energy & Climate Change (DECC) has today made an announcement regarding the second CFD Allocation Round.
The current intention is to hold this Allocation Round by the end of 2016, if Government’s strict conditions on cost reduction are met. We’ll be working with the different delivery partners to agree next steps and implementation plan, as further details are released. LCCC will also, in collaboration with delivery partners, hold events for Stakeholders to share further information on topics such as eligibility, the auction, the ‘Minor and Necessary’ process and contract award. Registration for these events will be through our website, so please register for the relevant stakeholder group to receive updates.
There are a number of parties involved in the CFD allocation process. The roles of each body involved are outlined below to assist you in directing any further queries:
- LCCC is the designated counterparty to Contracts for Difference (CFDs). Its role is to manage CFDs, as well as to manage the Supplier Obligation Levy that funds CFD payments.
- DECC sets the policy framework and leads on policy design and legislative implementation.
- National Grid is the designated EMR Delivery Body. It runs the application, qualification and allocation processes for CFDs and the Capacity Market.
- Electricity Market Reform Settlement Service (EMRS) provides settlement activities in relation to the CFDs and the Capacity Market.
LCCC also issues a monthly Bulletin to its Stakeholders. This will include updates on the Allocation Round and relevant information including dates of future events. If you would like to receive the Bulletin please contact firstname.lastname@example.org. Further updates will be provided on our website, so please refer back for updates as the process progresses. For more information please see here.
The Department for Energy and Climate Change (DECC) has today launched a consultation on the proposed 2015/16 operational cost budgets and levies, for the Low Carbon Contracts Company (LCCC) and the Electricity Settlements Company (ESC). The document can be found here and the consultation closes on 3 December 2015.
This consultation seeks views on the government’s proposal to amend the Contracts for Difference (Definition of Eligible Generator) Regulations.
The amendment is in order to specify that retrofit Carbon Capture and Storage (CCS) projects, involving the connection of an existing power station to a complete CCS system, are eligible for a Contract for Difference (CfD). The proposed change would ensure that existing CCS policy is correctly and expressly reflected in the CfD legislation. Please see here