The final Allocation Framework (“Framework”) for the distribution of CfD contracts, for the October 2014 Allocation Round, was published by The Department of Energy & Climate Change (DECC) on the 1st September 2014. The Framework governs, in summary, the CfD eligibility requirements, the rules relating to the valuation of applications, the allocation process and the auction process. This Framework applies to the allocation round opening on 14 October 2014 but may be subject to change before future rounds.
The Framework includes:
- confirmation of eligibility requirements which include that a signed grid connection offer is required alongside the planning permission;
- the valuation formula for the CfD applications, which is set out in Schedule 2 of the Framework;
- confirmation that the 2014 Allocation Round applications should be submitted using2012 prices and will be valued using 2012 prices (set out in Appendices 1 and 2 of Schedule 2 of the Framework);
- confirmation of the process for submitting sealed bids and details of the information that must be included, for example, the proposed strike price that the applicant will accept for each megawatt hour of metered output in pounds sterling (which must not be more than the applicable “Administrative Strike Price”), the applicant’s target commissioning date and the start date of the target commissioning window and the capacity of the CfD unit);
- confirmation that for each application, an applicant may submit up to 10 flexible bids (one must be the bid as per its original application) which are sealed bids with varying capacities and /or target commissioning dates of which no more than three bids may have a target commissioning date in the same delivery year. All flexible bids must be made at different strike prices, be expressed to the nearest 0.1 pence, have a first delivery year that is no earlier than the delivery year specified in the original application and have a capacity no greater than the capacity specified in the original application.
The following timescales have been confirmed in the Framework in relation to reviews, appeals and indicative start dates:
- the non-qualification review request date is 18 November 2014;
- the appeals deadline date is 9 December 2014;
- where there are no appeals the indicative start date is 23 December 2014; and
- where there are appeals, the indicative start date is 23 January 2015.
The Framework can be accessed by clicking here.
The Framework does not include the final budget allocated to CfDs, which will be confirmed on 29 September 2014. The draft budget was announced on 24 July 2014 but the final budget is unlikely to change from the £50m that has been allocated for established technologies and the £155m that has been allocated for less established technologies.