Question

To ask the Secretary of State for Energy and Climate Change, with reference to the Answer of 14 May 2014, Official Report, column 597W, on renewable energy, what assessment his Department has made of what the market conditions that will enable independent generators to use short-term Power Purchase Agreements (PPAs) and a wider variety of PPA counterparties will have developed in time for independent generators to secure necessary finance terms ahead of the first CfD auctions which are scheduled for October 2014.

In general, short-term Power Purchase Agreements are widely available in the current market, but providers of project finance tend to require long-term PPAs. The Offtaker of Last Resort (OLR) mechanism will provide additional certainty for projects with a Contract for Difference which should enable them to consider a wider range of routes to market and a wider range of offtakers, including short-term PPAs.

My officials have worked closely with developers, expert advisers and other stakeholders in working up the OLR proposals and to understand the likely impacts on the PPA market. The policy design is 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 have a high degree of clarity about the arrangements for OLR, in advance of the first auctions.