Department of Energy and Climate Change (DECC) issued last week (24th July) a Draft Budget Notice setting out the funding available for the first allocation round of the new renewable funding mechanism called Contracts for Difference (CfD). DECC's announcement came one day after the European Commission announced its determination that the CfD program is in line with EU state aid rules.

DECC indicate that CfD budget will be split between up to three technology groups. The first group includes established technologies, such as wind and solar, energy from waste with combined-heat-and-power (CHP), landfill gas and sewage gas. The second technology group includes less established technologies, such as offshore wind, anaerobic digestion and dedicated biomass with CHP. The third technology group is dedicated to biomass conversions. Contracts will be allocated competitively within each group.

The budget remains a draft and  is subject to change which final announcements expected in September. For now the draft budget notice includes expected annual budgets only for the first two technology groups, which are focused on established and less established technologies. It is notable that the budget for the years 2016/2017 onwards is approximately three times higher than for less established technologies.

Tim Waterfield head of Savills Energy commented 'DECC's announcement will encourage the renewable energy market to re-focus on less established technologies and we anticipate seeing more interest particularly in Anaerobic Digestion gas to grid projects and Dedicated biomass with CHP'.  Detail on biomass is not yet available, though DECC have announced that for this year it is not intending to release further budget for biomass conversion, beyond the funding that is allocated.

To view the CFD Budget Release for 2014 Allocation Round

The CfD scheme will run for 10 years starting April 2015 with a budget of about £15 billion. Selected individual projects will be able to receive support for up to 15 years.

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