UK projects that lose their CfD face up to 24-mo ban from future tenders

Energy projects in the UK that failed to sign their contracts for difference (CfDs) in time or failed to meet deadlines under such contracts will not be allowed to bid in another CfD round for up to two years.

The government said this week it has reviewed the responses in a consultation on the subject ended in June. It has decided to make the planned change to the so-called Non-Delivery Disincentive (NDD) exclusion period.

The NDD applies when a project won a CfD but the applicant failed to sign the contract, or if the CfD was terminated because of failure to meet the Milestone Delivery Date (MDD). In such cases, under the old rules, the site for the project cannot be used in an application for CfD rounds in 13 months.

The government will now change the exclusion period, so that the site for a project that has already won a CfD cannot be used in a CfD application i) for any CfD allocation round commencing in the period of 13 months from the date of the relevant CfD win notification; and ii) for the first CfD allocation round commencing between the end of that period and 24 months after CfD win notification.

Details are available here.

On announcing the proposal in May, the government explained that the 13-month exclusion period is less likely to be effective because allocation rounds may occur at a different tempo than previously planned. The UK’s first CfD auction was held at the start of 2015 and the next allocation round was expected in October of the same year. The second auction, however, has not yet taken place.

In August the Financial Times reported that the auction for offshore wind subsidies that was intended to take place by the end of 2016 has been delayed until early 2017.

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