Investing in renewable energy generation? Strike prices and CfD contract term changes

In order to encourage investment in low-carbon technologies and reduce the UK’s carbon emissions, the government is aware of the need to provide predictable revenue streams to investors. Contracts for difference (CfDs) are the government’s chosen mechanism to support this guaranteed income, by improving electricity price certainty and by providing the backing of a long-term contract.

It is hoped that CfDs will make it cheaper to deliver low-carbon generation by lowering the cost of financing projects — reductions that may not be achieved through existing policy instruments, such as the renewables obligation (RO) or carbon pricing.

On 4 December 2013, the Department for Energy & Climate Change (DECC) published a key decision document that sets out the strike prices for renewable technologies for the period 2014–15 to 2018–19. The decision document also provides an update on the key contract terms for the CfDs…

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