UK govt confirms supply chain strengthening changes for CfD

The UK government on Friday confirmed proposals to strengthen its supply chain plan policy for projects above 300 MW that compete for contracts for difference (CfD) as it published its response to a consultation on the matter.

The changes precede the fourth CfD allocation round, which is expected to be held in December. They include bringing forward the assessment of a developer's delivery of its supply chain commitments to shortly after a project's milestone delivery date (MDD), which is being extended to 18 months after CfD signing.

The Secretary of State for Business, Energy and Industrial Strategy will be given powers to assess and approve or reject a supply chain implementation statement.

The changes include the introduction of a new operational condition precedent, meaning that the CfD could be terminated if a generator does not provide a supply chain implementation statement certificate to the Low Carbon Contracts Company (LCCC) before the longstop date.

Vattenfall UK said that reviewing the supply chain plans for compliance at the MDD rather than at commissioning will reduce the investment risk to offshore projects in the UK pipeline.

Vattenfall UK country manager Danielle Lane said this is "a positive step in reducing the risks for developers – making it more likely that investment decisions can be taken to keep projects on track to deliver significant amounts of renewables capacity by the mid 2020s."

"The prospect of losing a Contract for Difference at MDD stage is still a significant investment risk however, and as such it is vital that a clear and transparent supply chain assessment process is put in place," she added though.

"The latest supply chain proposals set challenging new demands for project developers, so it's vital that the guidance is clear on how we can demonstrate the contribution we're making by creating thousands of jobs, developing skills and fostering innovation across the supply chain, as well as building vital new infrastructure," said RenewableUK's deputy chief executive Melanie Onn.

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