Cornwall Insight: Buy megawatt hours not megawatts via CfDs

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Government should consider buying volume of renewable power – megawatt hours over megawatts – according to Cornwall Insight.

The consultancy has published a paper that suggests reforming the contracts for difference (CfD) policy to buy volume over capacity could better meet carbon budgets while providing greater investor certainty and closer integration with the capacity market.

It sets out examples of volume-based approaches in Poland and Brazil, where governments buy megawatt hours – with penalty clauses for under delivery. Ireland is also set to move to a volume-based approach.

The report suggests auctions could be run for delivery four or five years ahead with volumes determined by the level of decarbonisation required to hit the current or next carbon budget.

Auctions could then be aligned with the Capacity Market timetable to enable a more joined up procurement policy that brings together decarbonisation and security of supply.

See details here.

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