Contracts for Difference
The Energy White Paper, Powering our Net Zero Future (CP 337), published in December 2020 by HM Government, defines the Contracts for Difference scheme (CfD) as: ‘The main support mechanism for large scale low-carbon electricity generation projects. Successful projects are awarded a long-term contract which secures a price to which they will either be topped up if electricity prices are low, or pay back to if electricity prices are high.’
A Contract for Difference allocation round is: ‘The competitive allocation process of CfD contracts. Participants bid the strike price they require to build their project with the cheapest ones winning on a pay-as-clear system.’
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