Government consults on move from Renewables Obligation to contracts for difference

As part of the Electricity Market Reform (EMR) proposals being taken through Parliament by the government, the existing support for new large-scale renewable projects under the Renewables Obligation (RO) will be replaced by Feed-in Tariff contracts for difference (CfDs). The RO will close to new accreditations from 31 March 2017 and all projects in the RO as at that date will remain in the RO until the original period of support expires or until 31 March 2037, whichever is earlier.

CfDs will be available to new projects from mid-2014. Accordingly, there is a period between this date and 31 March 2017 (the transition period) when new projects or extensions to existing projects will have an element of choice as to whether to receive support under the RO or by means of a CfD. Until now, developers and investors had not seen the detail of how this transition would operate. The Department of Energy and Climate Change (DECC) has recently issued a consultation on how the transition period should be managed and when the RO should move to a fixed-price model. The consultation is open until 25 September 2013.

New generating capacity will have a one-off choice between the RO and CfD schemes, which DECC proposes will be made at the point of application to either scheme. However, the government has confirmed that an application for RO preliminary (as opposed to full) accreditation will not be regarded as making a one-off choice for the RO…

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