Certainty for investors as Government publishes CfD contract terms

Investors have been provided a level of certainty today as the Government publishes draft terms for its Contracts for Difference (CfDs) support mechanism offered to investors in low-carbon energy generation.

The Government is introducing CfDs alongside a Capacity Market to help incentivise up to £110bn of private sector investment to 2020.

The Department of Energy and Climate Change (DECC) says that CfDs are vital to give investors in low-carbon generation the confidence they need to pay the up-front costs of major new energy infrastructure projects.

In June, and ahead of schedule, the Government published the draft strike prices for the CfDs, which will aim to help renewables contribute more than 30% of total power by 2020.

Business and Energy Minister Michael Fallon said: “No other sector is equal in scale to the British power market, in terms of the opportunity that it offers to investors, and the scale of the infrastructure challenge.

“The key contract terms have been published in detail to provide the energy sector and investment community with further certainty, so they can get on and invest.

“When compared to the existing system of support, the Renewables Obligation, this new support mechanism will make it cheaper to deliver low-carbon generation by around £5bn up to 2030.

“This will put the UK one step ahead in the global race to develop clean technologies, and will support up to 250,000 jobs across the energy sector,” added Fallon.

Industry will be able to provide feedback on the draft contract terms over the summer, and these views will be considered before Government publishes final terms which is expected in December 2013.

Leigh Stringer

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