Below you’ll find answers to the most frequently asked questions about the Contracts for Difference scheme.
At this stage, we cannot automate the option to allow Generators to nominate two different people to sign the CfD. However, if this causes an issue for Generators, we ask that you contact us after receiving the link to sign the CfD contract. We can then amend that link to allow a second person to sign. It is essential that if you need to excise this option, you do not sign until we resend you the invitation, as we will then not be able to edit the signing envelope
LCCC’s forecast assumptions are based, in part, on our prediction of generators’ behaviour in response to market conditions. This information is commercially sensitive, and we cannot share the exact details of our assumptions with the public. With the current high volatility in the market, these assumptions can change significantly between the determination runs.
LCCC provides Ofgem with forecasts on CfD payments and Eligible Demand. Part of this information is publicly available and can be found in the data portal. For more information on how exactly Ofgem uses this information and which determination run is used to update the calculation of the price cap please contact Ofgem.
The official Start Dates, and expected start dates for all generators are available on the LCCC website. However, the start date assumptions LCCC makes for the quarterly obligation period forecast might differ from what is published, based on LCCC’s knowledge of the Facility, confidential information provided by the generator and predictions of generators’ behaviour in response to market conditions. Similarly, the start dates for the advanced forecast are based on the information on the LCCC website, on generators’ updates and on LCCC’s assumptions following the market conditions. The information, other than what is available on the website, is commercially sensitive, and we cannot share the exact dates of our assumptions with the public.
Renewable Energy Guarantees of Origin (REGOs)
There is a Subsidy Cumulation (provision within the CfD that prohibits projects from claiming multiple streams of support for the same outputs, in this case, low carbon electricity).
Renewable Energy Guarantees of Origin (REGOs) are certificates that are issued by Ofgem for renewable generation and can be claimed by both Feed-in Tariff projects and CfD projects respectively.
Strike Price: The Strike Price is the fixed price a Generator will earn per MWh of Electricity Generated for the lifetime of the contract.
Administrative Strike Price: Administrative Strike Prices (GBP per MWh) set the maximum support, on a £/MWh basis, that the government is willing to offer developers for each technology in a given delivery year. ASPs set a cap on clearing prices in an auction as generators cannot receive a strike price value higher than their technology AS.
LCCC performs the Strike Price Adjustment (SPA) calculations annually as per the relevant CFD clauses and communicates the revised Strike Prices to the Generators no later than the 5th business day post the 1st of April each year.
Source: Strike Price Adjustment Guidance
These frequently asked questions and responses (“FAQs”) have been prepared by Low Carbon Contracts Company Ltd ("LCCC") in response to queries raised by stakeholders in relation to the content of the Contract for Difference (“CFD”), which is comprised of the CFD Agreement and CFD Standard Terms and Conditions (“Conditions”), as published by the Department of Energy & Climate Change on 29 August 2014. The FAQs are also applicable to Investment Contracts (“ICs”) but users of this website are advised to fully review the equivalent clauses in their ICs as there are differences between the CFD and the IC. These FAQs are subject to and are provided on the basis of the following:
- The FAQs do not supersede or replace the provisions of the CFD or IC and are not intended to and do not constitute legal, investment, commercial or operational advice and should not be relied upon as such. Users of this website should not place reliance upon these FAQs and should refer to the full terms of the CFD or IC, and/or consult their professional advisors where they require information or advice on matters relating to the CFDs or ICs generally and/or any CFD or IC to which they are a party.
- The FAQs reflect the current thinking and approach of LCCC and should not be viewed as in any way as binding on LCCC.
- It is our intention to keep the FAQs under review and to publish revised issues from time to time.
Defined terms used in the FAQs but not defined therein have the meanings prescribed to them in the CFD or IC (as applicable) and the Energy Act 2013.