Outcomes of First CfD Allocation Round – REA Reaction

While welcoming the conclusion of the Allocation round in line with the intended timetable, the REA has consistently expressed concerns regarding the implementation of CfD policy and how the allocation process operates.

DECC have today (26th February 2015) published the outcomes of the first ever allocation round for Contracts for Difference (CfD) contracts. The REA welcomes the fact that a key component of Electricity Market Reform (EMR) and renewable energy policy has now been delivered in line with the intended timetable following several years of development.


The outcomes show that 2.1GW of capacity has been procured, at a total cost this round of £315million. The UK has legally binding renewable energy targets for 2020 and developing this capacity will help meet these goals.

The REA's Chief Executive, Dr Nina Skorupska, said:

"Today is a significant milestone for the long-standing Electricity Market Reform (EMR) and CfD policies and it is positive that the first allocation round has been completed on time. The procurement of significant renewables capacity is beneficial to the UK in terms of meeting our legally binding renewable energy targets in a cost-effective manner, improving energy security and delivering jobs and investment.

We have longstanding concerns regarding the CfD policy and are engaging with Government on these in the lead up to future allocation rounds. Today's results show many of these concerns are still valid, for example regarding emerging technologies. That said, it is positive that a wider spread of technologies than anticipated was awarded contracts.

If we have one overarching message to Government it would be that industry needs a stable policy framework in the coming years and that energy is too important to play politics with at the coming election."

While welcoming the conclusion of the Allocation round in line with the intended timetable, the REA has consistently expressed concerns regarding the implementation of CfD policy and how the allocation process operates. These include:

· no resources have been allocated to converting coal fired power stations to clean biomass sources (‘biomass conversions'), a quick to deploy, cost-effective method of securing large amounts of flexible capacity at a time when the UK faces a potential generating shortfall in the short term and having contracted such significant amounts of fossil fuel generation in the Capacity Market,

· more budget allocated to higher cost renewables than to the cheapest,

· more frequent allocation rounds are vital to the industry's ongoing health as annual rounds create huge uncertainty,

· revised application criteria and a range of measures to simplify the process for all companies are necessary to streamline the policy.

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