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Government to act as counterparty under energy Contracts for Difference scheme

Date: Mon, 26 Nov 2012 | Author: Paul Sanderson

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A Government-owned company will be set up to act as a counterparty under the Contracts for Difference (CfD) regime to enable more investor confidence in renewable energy.

The counterparty company will have levy-raising powers to enable it to raise funds from suppliers to meet its costs, including payments to generators.

Under the Energy Bill, CfD will be introduced as long-term contracts that are designed to provide stable revenues for investors in low carbon energy projects at a fixed level known as the strike price.

These contracts, according to the Department of Energy and Climate Change, will help developers secure the large upfront amounts of capital required for low carbon infrastructure. By providing a fixed price, they should therefore help to lower the costs of capital.

CfD is due to replace the Renewables Obligation to new entrants by 2017.

The Government also intends to provide £7.6 billion in investment to increase the amount of renewables from 11 per cent at present to 30 per cent by 2020.

Renewable Energy Association chief executive Gaynor Hartnell said: “The commitment of the necessary budget for the renewable power sector to meets its share of the 2020 target is very welcome news. This should help to draw a line under the recent politicking, which has been so damaging to investor confidence.

“Today’s announcements finally give a suggestion that the Government is getting behind the renewables agenda, which promises 400,000 green jobs across power, heat and transport by 2020, along with a much more secure energy future.”

Category: Energy
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