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Explanatory note

Original text. Later amendments are not shown.

(This note is not part of the Regulations)

These Regulations are made under Chapter 2 of Part 2 of the Energy Act 2013 (c. 32) (“the Act”), which enables the Secretary of State to make regulations about “contracts for difference” (defined in section 6(2) of the Act), for the purpose of encouraging low carbon electricity generation.

Contracts for difference (“CFDs”) are between a “CFD counterparty” which is a person designated under section 7 of the Act and an “eligible generator” (defined in the Contracts for Difference (Definition of Eligible Generator) Regulations 2014 (S.I. 2014/2010)). They award subsidies accessed through a private law contract normally secured in an allocation round.

Part 2 amends the Contracts for Difference (Allocation) Regulations 2014 (S.I. 2014/2011) as follows:

  • Chapter 2: introduces price, pot and estimated budget notices; defers the timing of the contract budget notice to the allocation framework and revises the timing of the contract budget revision notice.

  • Chapter 3 expands the auditing provisions to the estimated budget.

  • Chapter 4 amends regulation 54 (allocation reports) so a delivery body may now be directed to provide the Secretary of State with: (a) the bids of strike prices; and (b) information about those bids before the first “CFD notification” (defined in section 12(1) of the Act, as a notification containing certain information for the purpose of making an offer to contract with an eligible generator).

Part 3 amends the Contracts for Difference (Electricity Supplier Obligations) Regulations 2014 (S.I. 2014/2014). It incorporates the Sustainable Industry Reward (also known as the Clean Industry Bonus) into the calculation for: (a) the interim levy rate; and (b) the “CFD period contribution”, payable to the CFD counterparty by an “electricity supplier” in respect of a day in the “quarterly obligation period” (all defined in regulation 2(1) of S.I. 2014/2014).

A full impact assessment of the effect that this instrument will have on the costs of the business, voluntary and public sector is available from the Department for Energy, Security and Net Zero, 3-8 Whitehall Place, London, SW1A 2HH, and is available alongside this instrument on www.legislation.gov.uk.