Frequently Asked Questions

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What is a CFD?

CFDs are awarded under the Contracts for Difference regime which is a mechanism introduced as part of the UK Government’s Electricity Market Reform programme to promote investment in secure and low carbon electricity generation while improving affordability for consumers. CFDs are private law contracts between a generator and LCCC which are in a standard template form published by the Department for Business, Energy & Industrial Strategy. The template CFD is divided into two parts, being the front end agreement (the “CFD Agreement”) into which the variables are inserted (e.g. generators name, project description, strike price) and the template standard terms and conditions.  The essence of a CFD is that the generator will be paid the difference between the ‘strike price’ and the ‘reference price’. The strike price is a price for electricity reflecting the cost of investing in a particular low carbon technology.  The reference price is the average market price for electricity at the relevant point in time.  If the generator sells its electricity at less than the strike price, LCCC will pay it the difference.  If the generator sells its electricity for more than the strike price, the generator will pay LCCC the difference.

How many CFDs have signed following the first Allocation Round?

A total of 25 projects signed 27 CFDs under the first Allocation Round. 1 of the 25 projects is a phased CFD comprising of 3 phases, each of which has its own CFD.

What information does the CFD register include?

Under The Contracts for Difference (Standard Terms) Regulations 2014, as amended, LCCC is required to publish the following information:

  • the unique identifier of a CFD;

  • the information set out in a CFD notification (which will include Target Commissioning Window, Target Commissioning Date, capacity, technology type, geographical co-ordinates);

  • any modification of standard terms;

  • the CFD counterparty’s reason for accepting an application to modify standard terms;

  • any change to the strike price of a CFD;

  • any reduction to the capacity of a generating facility under a CFD;

  • where a CFD is terminated, the date on which termination occurs; and

  • the date that a generator proposes to be the start date for the purposes of its CFD.

LCCC may exclude from publication any information which in its opinion it would be entitled not to disclose in response to a request for its disclosure under the Freedom of Information Act 2000(a) or the Environmental Information Regulations 2004(b).  LCCC is required to give generators an opportunity to make representations before deciding what information should be excluded from publication in the CFD Register.

How will the CFD Register be maintained?

LCCC will keep the CFD Register up to date and publicly accessible on its website. Information relating to new CFDs entered into under future allocation rounds will be added to the CFD Register.

Will LCCC publish details of generators that were offered but did not sign a CFD?

The CFD Register will only contain details of CFDs that have been accepted by generators.  Generators that have been offered a CFD but have failed to sign it will be subject to the Non-Delivery Disincentive (NDD).  The NDD is designed to deter speculative applications for example by incentivising applicants who have been offered CFDs to sign them.  The NDD policy is reflected in The Contracts for Difference (Allocation) (Amendment) Regulations 2015. LCCC is required to make a register publicly available of sites that have been excluded under the NDD. These excluded sites will be published on LCCC’s website as soon as is practicable following the date of exclusion of the site.

Will the details contained within the CFD Register be sufficient for Suppliers to assess the impact on what their portion of the levy will be?

The CFD Register provides information about the projects which will give Suppliers the information they will need to undertake their own assessment of how the levy rate may evolve over time. Please note that the CFD Register only includes CFDs (and Investment Contracts) to which LCCC is a party. It does not include Investment Contracts to which the Secretary of State for Business, Energy & Industrial Strategy is a party even though they may be managed by LCCC on behalf of the Secretary of State.

LCCC also publishes the forecast for Interim Levy Rate, Total Reserve Amount and CFD Difference payment on its transparency tool.

When/Why do LCCC adjust strike prices?

The ‘strike price’ is a price for electricity reflecting the cost of investing in a particular low carbon technology and is set out in the CFD Agreement.  The strike price is adjusted in accordance with the provisions of the CFD.  The circumstances where the strike price will be adjusted, the formula to be used in calculating the adjustments and the timings for such adjustments are set out in the CFD.  When a strike price is adjusted, the CFD Register will be updated accordingly in accordance with Regulation 12 of The Contracts for Difference (Standard Terms) Regulations 2014, as amended.