Contracts for Difference auction delayed until 2017: report

The next Contracts for Difference (CfD) auction has been delayed until early 2017, the Financial Times has reported.

Former energy secretary Amber Rudd had previously said it would take place towards the end of this year.

The merging of the business and energy departments into the Department for Business, Energy and Industrial Strategy (BEIS) and the August summer holiday break are to blame for the delay, the paper was told by an unnamed source “with knowledge of the auction timetable”. The source said it does not reflect a change in policy under Theresa May’s new government.

The government has also undertaken a review of Hinkley Point C after delaying its final decision until the autumn, and is due to publish a roadmap for its small modular reactor competition around the same time.

A spokesman for BEIS said: “We are building a secure, affordable, clean energy system, with long-term security for investors including £730 million of funding for clean energy projects this parliament.”

The delay means there will be around a two-year gap between the next auction and the last one. In his final budget in March, former chancellor George Osborne revealed £730 million of annual funding would be made available in the three auctions due to take place in the current parliament. He said £290 million would be up for grabs in the first one, which will only be open to “less established” technologies such as offshore wind and tidal.

There have been repeated calls for the government to reform the Levy Control Framework – the mechanism to control the cost of renewable subsidies, including CfDs. In February industry body Energy UK petitioned the government to “urgently review” the LCF to provide clarity to companies and investors.

A recent paper by a professor from the University of Exeter found that uncertainty is “built into” the mechanism, because the factors which determine the cost of renewable subsidies are themselves “variable and uncertain”.