DESNZ, Dispatchable Power Agreement Business Model

• The subsidy relates to a ‘DPA Scheme’ which is a business model for power carbon capture, usage and storage (CCUS) projects between a power plant developer and DPA contract counterparty.
• The scheme is based on the contract for difference (CfD) model and will last between ten to fifteen years. Payments will be made on a regular basis (the Availability Payment) with potential top-ups to help cover running costs (the Variable Payment).
• Our key takeaways are that reports should:
  • explain in detail how its coverage will be limited to the minimum necessary and why any maximum subsidy intensity excludes any charges;
  • explicitly discuss the impact on competition especially in relation to any unabated power generation and where various markets would apply across the supply chain. This discussion should also consider any market evolutions expected in the subsidies lifetime;
  • consider government interventions and cross chain risks which may be relevant if a market failure occurs;
  • provide the most up to date evidence, or where older evidence is used, explain why this remains relevant;
  • give more detail, where relevant, on the balancing exercise in relation to upstream greenhouse gas emissions, given the wider decarbonisation objective of the Scheme, and if possible, quantify these to set alongside the projected CO2 savings; and
  • draw on information and evidence to set out the level of environmental protection and overall reductions in GHG emissions when considering compliance with energy and environmental principles.

Find Out More