Question

To ask the Secretary of State for Energy and Climate Change, what assessment he has made of (a) the readiness of markets for a Contract for Difference (CfD) competitive bidding process and (b) the effect on independent generators of early introduction of CfD auctioning.

The Department launched a consultation on our approach to competitive allocation of Contracts for Difference (CfDs) in January 2014. This included proposals to move to auctioning of CfDs from the first allocation this autumn. We carefully considered the responses to the consultation before confirming our policy position in the Government Response published on 13 May 2014. Competitive allocation will deliver renewable energy at a lower cost for consumers.

In developing our proposals for the move to competitive allocation, my officials have also worked closely with developers and other stakeholders, including representatives of independent renewable energy generators.

In particular, we are introducing the Offtaker of Last Resort (OLR) to support independent renewable generators by guaranteeing a route-to-market and therefore improving their ability to raise project finance. The policy design is already at an advanced stage, and the detail of the proposals has been recently consulted on. We are on track to deliver the final policy and introduce enabling regulations ahead of the first allocation of CfDs. CfD applicants will, therefore, have a high degree of clarity about the arrangements for OLR well in advance of the first auctions.