CFD appeals may cost ineligible energy generators

Offshore wind energy generators may may look to bid in the CFD auction.

Energy minister Matthew Hancock has warned that companies that do not qualify to bid in the Contracts for Difference (CfD) auction may face bigger hurdles should they try to appeal. He wants to avoid appeals being a “no cost option” to generators that miss out on government-backed contracts.

Hancock was asked by the Energy & Climate Change whether improvements could be made to design of the CfD process and for assurances that the contracts would be awarded swiftly.

The contracts for difference auctions, which allocate contracts to eligible low carbon generators guaranteeing them a set price for power, were originally planned to take place in December with contracts awarded late December/early January. It will now take place in mid-February, provided all appeals have been concluded.

Hancock claimed that the programme remained “on the expected path as broadly set out, it’s just we knew that if there were appeals we would be on the back half of that [timetable]”.

Therefore it was “worth looking whether we get the incentives around appeals right”, he said.

He said it was “not necessarily” a case of making them “more administratively burdensome” but said a “no cost… risk free” appeals process meant generators would automatically appeal rather than consider whether they have a good chance of winning.

“You wouldn’t want a situation [like that]… because it undermines the whole decision making process. So will consider that after the CfD auction to see whether we can tighten up on timing.”

Watch the session here.

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