BEIS, Contracts for Difference (CfD)

• The estimated value of the lifetime subsidy over 15 years is more than £10 million (orecise amount not able to be confirmed). The purpose of the subsidy was to stimulate the generation of low carbon electricity by offering 15-year CfD contracts, between eligible low carbon electricity generators and a government SPV: the Low Carbon Contracts Company (LCCC).
• Our key takeaways from the SAU report are:
  • Use up to date evidence in your assessments, rather than (for example) referring to EU State Aid law.
  • In relation to Principle E, ensure to provide a thorough review of any alternative policy tools, as well as an up-to-date counterfactual of a market without the proposed subsidy scheme that is being assessed.
  • Offer a comprehensive market and competition analysis. E.g. here, the analysis should have explicitly recognised the impacts on non-renewable generators and competition between renewable technologies.
  • Identify and systematically evaluate benefits and drawbacks of the subsidy scheme, paying close attention to the competition and investment context within the UK.

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