May 14 (Renewables Now) - The UK government has launched a proposal to defer planned increases in electricity suppliers' payment obligations under the Contract for Difference (CfD) scheme due to the Covid-19 pandemic.
The Department of Business, Energy and Industrial Strategy (BEIS) said on Tuesday it has started a consultation process, seeking views on whether to postpone to the first quarter of 2021 the payment of part of the amount of the increase. The higher obligations were initially expected to be collected by the Low Carbon Contracts Company (LCCC) in July for the second quarter of 2020. It, however, has advised the government that following a drop in electricity demand caused by the COVID-19 lockdown measures and increased payments to CfD generators due to lower wholesale electricity prices, electricity suppliers will be burdened with an unexpected rise in their payment obligations for the April-June quarter.
An online consultation event will be held on May 15 to discuss the proposal. Responses will be due online or via e-mail by May 19. Provided that this proposal is adopted, changes to the CfD Electricity Supplier Obligation Regulations 2014 will be necessary.
The energy department is also extending a one-off loan to LCCC to pay generators without the need to lift the interim levy rate at short notice given the “exceptional circumstances” caused by the coronavirus. The provision of the loan does not depend on whether the above-mentioned proposal will be adopted.
Suppliers’ obligations for CfD payments in the second quarter of 2020 will remain unchanged, the government noted.