UK CFD Allocation Amendment Regulations 2015 Guide: Key Changes to Energy Act 2013 Rules

Key Takeaways

• The Contracts for Difference (Allocation) (Amendment) Regulations 2015 (S.I. 2015 No. 981) introduced significant changes to the UK's Contracts for Difference (CFD) framework.
• These amendments define an "excluded site" and an "exclusion period" to penalise non-delivery or non-signature of CFDs.
• Generators face temporary site exclusion from future allocation rounds if they fail to meet milestone delivery requirements or sign an offered CFD.
• Allocation rounds must not commence earlier than 25 working days after the closing date of an exemptions request notice.

Understanding the Contracts for Difference (Allocation) (Amendment) Regulations 2015

The UK's energy policy framework includes Contracts for Difference (CFDs), designed to incentivise investment in low-carbon electricity generation. These contracts operate under the authority of the Energy Act 2013. The Contracts for Difference (Allocation) (Amendment) Regulations 2015, formally known as "The Contracts for Difference (Allocation) (Amendment) Regulations 2015," introduced specific changes to the existing "The Contracts for Difference (Allocation) Regulations 2014." These amendments, established under Statutory Instrument S.I. 2015 No. 981, aim to strengthen the CFD allocation process by addressing issues of non-delivery and non-signature by eligible generators.

Key Amendments: Non-Delivery and Site Exclusions

The 2015 Regulations introduced new mechanisms to ensure that projects awarded CFDs progress as planned. A central element of these amendments is the concept of a "temporary site exclusion." This applies in cases where a generator fails to meet its obligations.

Specifically, the regulations define a "non-delivery case" and a "non-signature case." A non-delivery case arises when "the reason for the termination was that the eligible generator failed to achieve the stages for delivery of the generating station which were required under the CFD." A non-signature case occurs when an eligible generator fails to sign an offered CFD. In either scenario, the site associated with the project becomes an "excluded site."

An "excluded site" is then subject to an "exclusion period." During this period, the site is barred from participating in subsequent CFD allocation rounds. This measure acts as a disincentive for generators who do not fulfil their commitments, aiming to ensure that CFD budgets are allocated to projects that will deliver.

Procedural Changes for Allocation Rounds

Beyond site exclusions, the 2015 Regulations also refined the procedural rules for CFD allocation rounds. One notable change concerns the timing of allocation round commencement relative to exemptions request notices. The regulations state that an allocation round "must not state a commencement date which is earlier than 25 working days after the closing date stated in the exemptions request notice." This provision ensures adequate time for processing exemption requests before a new allocation round begins.

Geographic Scope

It is important to note the geographic limitations of these regulations. "These Regulations do not extend to Northern Ireland." This means the amendments apply specifically to Great Britain's CFD framework.

Impact on Generators

The Contracts for Difference (Allocation) (Amendment) Regulations 2015 have a direct impact on generators participating in the UK's CFD scheme. They introduce stricter accountability for project delivery and contract signature. Generators must be aware of the definitions of "excluded site" and "exclusion period" and understand the implications of a "non-delivery case" or "non-signature case." Adherence to project milestones and timely contract execution are essential to avoid temporary site exclusion from future allocation rounds.