The Contracts for Difference (Allocation) Regulations 2014

Made: 31st July 2014

Coming into force in accordance with regulation 1

Accordingly, the Secretary of State, in exercise of the powers conferred by sections 6(1), 10, 12(1) to (3), 13(2),(3) and (8) and 19 of the Energy Act 2013, makes the following Regulations:

PART 1 — Introduction

Citation, commencement and extent

1

• (1) These Regulations may be cited as the Contracts for Difference (Allocation) Regulations 2014 and come into force on the day after the day on which they are made.

• (2) Except for Part 10, these Regulations do not extend to Northern Ireland.

Interpretation

2

• (1) In these Regulations—

• “accreditation” means accreditation under any of the renewables obligation orders;

• “the Act” means the Energy Act 2013;

• “additional qualification requirements” means the requirements set out in Chapter 4 of Part 4 applicable to particular applications;

• “administrative strike price” means the strike price—used by the delivery body to value an application under regulation 29[^f00002]; andwhich is the maximum strike price which applies to a successful application;

• ...

• “allocation round notice” has the meaning given by regulation 4;

• “appeals deadline date” has the meaning given by regulation 43(2)(c) ...;

• “applicable planning consents” has the meaning given by regulation 24(1);

• “applicant” has the meaning given by regulation 16(2);

• “application” means (except in paragraph 4(b) of Schedule 1) a request by an applicant to the delivery body to take part in a contract allocation process in respect of a CFD unit;

• “application closing date” in relation to an allocation round has the meaning given by regulation 4A(2)(b)(iii);

• “application opening date” has the meaning given by regulation 4A(2)(b)(ii);

• “application window” means the period beginning with the application opening date and ending with the application closing date;

• “application window notice” has the meaning given by regulation 4A(1);

• “application window variation notice” has the meaning given by regulation 5A(1);

• “applications valuations” has the meaning given by regulation 29(1) and (2);

• “associated” has the same meaning as it has in paragraph 37 of Schedule 2A to the Electricity Act 1989;

• “audit report” has the meaning given by regulation 36(2)(b);

• ...

• ...

• “CFD unit” means the whole or part of an eligible generating station;

• “connection agreement” has the meaning given by regulation 25(6);

• “contract allocation framework” means the part of an allocation framework[^f00003] which deals with matters other than sustainable industry rewards;

• “contract allocation process” means the process included in a contract allocation framework by which the delivery body determines which qualifying applications are successful applications and the strike price applicable to successful applications;

• “contract budget” means an amount set out in a contract budget notice, which is the total—sum of money potentially payable by the CFD counterparty[^f00004] under CFDs[^f00005] to eligible generators[^f00006] in a delivery year, excluding sustainable industry rewards;capacity of electricity which may be generated by generating stations subject to a CFD in a delivery year; ora combination of (a) and (b);

• “contract budget notice” means a notice required by regulation 11;

• “contract budget revision notice” means a notice referred to in regulation 12(2)(b);

• “contract framework notice” has the meaning given by regulation 7(1);

• “contract framework revision notice” has the meaning given by regulation 8(4);

• “delivery body” means—the national system operator; orif the national system operator’s functions under Chapter 2 of Part 2 of the Act have been transferred to an alternative delivery body, that body;

• “delivery year” means any of—the period from the date on which these Regulations come into force and ending on 31st March 2015; andthe 12 month periods commencing on 1st April 2015 and each anniversary of that date and ending with the 12 month period ending on 31st March 2035;

• “distribution system” means a system, other than a private network, of the type described in section 4(4) of the Electricity Act 1989[^f00003];

• “estimated budget” means the total—estimated sum of money potentially payable by the CFD counterparty under CFDs to eligible generators in a delivery year, excluding sustainable industry rewards;estimated capacity of electricity which may be generated by generating stations subject to a CFD in a delivery year; ora combination of (a) and (b);

• “estimated budget notice” means a notice required by regulation 10B(2);

• “excluded application” has the meaning given by regulation 14(1);

• “excluded site” has the meaning given by regulation 14A(6);

• ...

• “exemption certificate” has the meaning given by regulation 14C(9);

• “exemptions request notice” has the meaning given by regulation 14C(2);

• “final strike price” means the strike price which applies to a successful application after the contract allocation process applicable to that application has been completed;

• ...

• ...

• “general qualification requirements” means the requirements set out in Chapter 3 of Part 4;

• “halt direction” has the meaning given by regulation 38(1)(a)(ii);

• “maxima” has the meaning given by regulation 11(2)(b);

• “minima” has the meaning given by regulation 11(2)(a);

• “a non-delivery case” has the meaning given by regulation 14A(1)(b);

• “non-fossil fuel orders” means—the Electricity (Non-Fossil Fuel Sources)(England and Wales) Order 1994[^f00004];the Electricity (Non-Fossil Fuel Sources)(Scotland) Order 1994[^f00005];the Electricity (Non-Fossil Fuel Sources)(England and Wales) Order 1997[^f00006];the Electricity (Non-Fossil Fuel Sources)(Scotland) Order 1997[^f00007];the Electricity (Non-Fossil Fuel Sources)(England and Wales) Order 1998[^f00008];the Electricity (Non-Fossil Fuel Sources)(Scotland) Order 1999[^f00009];

• “non-qualification determination” has the meaning given by regulation 19(2)(b);

• “non-qualification review” has the meaning given by regulation 20(1);

• “non-qualification review request date” has the meaning given by regulation 20(2)(a);

• “a non-signature case” has the meaning given by regulation 14A(1)(a);

• “offer lapsed” in relation to the offer of a CFD is to be construed in accordance with regulation 11(1) of the Standard Terms Regulations 2014;

• “offer of a CFD” has the meaning given in regulation 10(1) of the Standard Terms Regulations 2014;

• “offshore waters” means waters—in or adjacent to England, Wales or Scotland which are between the mean low water mark and the seaward limits of the territorial sea; orwithin the area of the sea designated under section 41(3) of the Marine and Coastal Access Act 2009[^f00010];

• “offshore wind CFD unit” means a CFD unit which generates electricity by the use of wind and which is situated (or is to be situated) wholly in offshore waters;

• ...

• “pending applicant” and “pending application” have the meanings given to those terms by regulation 49(2);

• “pending bid” has the meaning given by regulation 50(2)(b);

• “phased offshore wind CFD unit” means an offshore wind CFD unit—which is to be established or altered by two or three phases of construction;where each phase of construction is to provide new generating capacity; andin the case of a CFD unit which is to be established, where each phase of construction is to provide a generating capacity of more than 5 megawatts;

• “post-appeals indicative start date” has the meaning given by regulation 31(2);

• “pot” has the meaning given by regulation 11(2)(c);

• “pot notice” means a notice referred to in regulation 10A(3);

• “price notice” means a notice required by regulation 10A(1);

• “private network” means a network for the distribution of electricity which is not operated by a person authorised to distribute electricity under a licence granted or treated as granted under section 6(1)(c) of the Electricity Act 1989;

• “proceed direction” has the meaning given by regulation 38(1)(b)(i);

• “proceed notice” has the meaning given by regulation 37(1)(b)(i);

• “qualification appeal” has the meaning given by regulation 43(1);

• “qualifying applicant” has the meaning given by regulation 17(2) and includes a person determined by the appeals body as a qualifying applicant;

• “qualifying application” has the meaning given by regulation 17(2);

• “registration” means, other than in Schedule 1, registration on the central FIT register as an accredited FIT installation within the meaning of Part 3 of the Feed-in Tariffs Order 2012[^f00011];

• “relevant CFD unit” means the CFD unit which is the subject of an application;

• “relevant works” has the meaning given by regulation 23(2) and (4);

• “remote island wind CFD unit” means a CFD unit which satisfies the remote island wind conditions in regulation 27A(3);

• “renewables obligation orders” means—the Renewables Obligation Order 2009[^f00012]; orthe Renewables Obligation (Scotland) Order 2009[^f00013];

• “re-run notice” has the meaning given by regulation 37(1)(b)(ii);

• “review notice” has the meaning given by regulation 20(1);

• “round variation notice” has the meaning given by regulation 5(1)(a);

• “the Standard Terms Regulations 2014” means the Contracts for Difference (Standard Terms) Regulations 2014;

• “strike price” means (except in Part 10) a price for one megawatt hour of electricity generated by a CFD unit;

• “successful application” means an application in respect of which, further to a contract allocation process, a CFD notification may be made or, in the case of an application in respect of a phased offshore wind CFD unit, more than one CFD notification may be made;

• “sustainable industry reward” means a sum of money which—may be payable by the CFD counterparty to an eligible generator under a CFD allocated in the seventh, eighth or ninth allocation round;is determined in accordance with a sustainable industry reward allocation framework; andis payable for the purpose of supporting the matters referred to in regulation 6(2B) (development and sustainability of supply chains);

• “sustainable industry reward allocation framework” means the part of an allocation framework which deals with sustainable industry rewards;

• “sustainable industry reward allocation process” means the process included in a sustainable industry reward allocation framework for the determining of sustainable industry reward applications;

• “sustainable industry reward applicant” means an eligible generator which makes a sustainable industry reward application;

• “sustainable industry reward application” means an application made under regulation 28A(1);

• “sustainable industry reward budget” means an amount set out in a sustainable industry reward budget notice, which is the sum of money potentially payable by the CFD counterparty under CFDs to eligible generators who are eligible for such payments in accordance with a sustainable industry reward statement, expressed as a sum of money payable per gigawatt of electricity generated by such generators;

• “sustainable industry reward budget notice” means a notice required by regulation 13A(1);

• “sustainable industry reward framework notice” has the meaning given by regulation 7(3);

• “sustainable industry reward framework revision notice” has the meaning given by regulation 8(5);

• “sustainable industry reward statement” means a statement given by the Secretary of State under regulation 28C, as revised, where applicable, in accordance with regulation 28E;

• “target commissioning date” means the intended date, being a date within the target commissioning window, for the generation of electricity to begin by a CFD unit once it is established or altered;

• “target commissioning window” means the period in which the generation of electricity must take place by a CFD unit once it is established or altered, the duration of which is listed in the contract allocation framework for each type of eligible generating station;

• “target commissioning window start date” means the date on which the target commissioning window begins;

• “target dates” means the target commissioning date and the target commissioning window start date;

• “temporary site exclusion” has the meaning given by regulation 14A(2) and (3);

• “termination notice” has the meaning given by regulation 5(1)(b);

• “transmission system” has the meaning given by section 4(4) of the Electricity Act 1989;

• “variation notice” has the meaning given by regulation 34(2);

• “working day” means a day that is not a Saturday or Sunday, Christmas Day, Good Friday or any day that is a bank holiday in England and Wales under the Banking and Financial Dealings Act 1971.

• (2) The following have the same meanings as they have in the Contracts for Difference (Definition of Eligible Generator) Regulations 2014[^f00015]—

• ...

• “complete CCS system”;

• “eligible generating station”;

• “eligible generator”;

• “generating station”;

• “hydro generating station”;

• “landfill gas”;

• “photovoltaic array”;

• “relevant fossil fuel generating station”;

• “sewage gas”.

PART 2 — Allocation rounds and allocation frameworks

Notices

3

A notice given by the Secretary of State under this Part must be made publicly available by the Secretary of State as soon as practicable after it is given.

Establishing allocation rounds

4

• (1) The Secretary of State may by notice establish an allocation round (“an allocation round notice”).

• (2) An allocation round notice must be given to the delivery body and the CFD counterparty.

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) An allocation round may be for some or all of the period of another allocation round.

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Varying and terminating allocation rounds

5

• (1) The Secretary of State may—

• (a) by notice (“a round variation notice”) vary the commencement date of an allocation round, where the commencement date of that allocation round has not yet passed; or

• (b) by notice (“a termination notice”) terminate an allocation round so that no CFDs are to be allocated further to that round.

• (2) A round variation notice or a termination notice must—

• (a) be given to the delivery body and the CFD counterparty;

• (b) ... state the date on which it has effect; and

• (c) identify the allocation round to which the notice applies.

• (3) A round variation notice must give reasons for the variation effected by the notice.

• (4) Where an allocation round is terminated after a contract allocation process in that round is completed, the termination notice must give reasons for the termination.

• (5) A ... termination notice is not valid unless the date on which it has effect is—

• (a) not earlier than the date of the notice; and

• (b) before the delivery body makes the first CFD notification further to the allocation round to which the notice applies.

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6A) No variation of the commencement date of an allocation round ... may be made where the varied date would be earlier than 5 working days after the date of the round variation notice.

• (7) Where the delivery body receives a round variation notice or a termination notice, it must as soon as practicable after receipt send a copy of the notice to each applicant who has made an application (which has not been withdrawn) in the round to which the notice applies.

Allocation frameworks

6

• (1) The Secretary of State—

• (a) must ensure that one contract allocation framework applies to each allocation round;

• (b) may apply a contract allocation framework to more than one allocation round;

• (c) may, in relation to the seventh, eighth and ninth allocation rounds, apply a sustainable industry reward allocation framework to the allocation round in addition to the contract allocation framework; and

• (d) may, if the Secretary of State applies a sustainable industry reward allocation framework to the seventh, eighth or ninth allocation round, apply that framework to more than one of those allocation rounds.

• (2) A contract allocation framework must, in respect of the allocation round or rounds to which it applies, set out—

• (a) the contract allocation process which applies to each type of application which may be made; and

• (b) each method of calculation which the delivery body must apply to determine—

• (i) the applications valuations; and

• (ii) the value of an application whilst carrying out the contract allocation process.

• (2A) A sustainable industry reward allocation framework must, in respect of the allocation round or rounds to which it applies, set out—

• (a) the sustainable industry reward allocation process;

• (b) how the Secretary of State is to determine the contribution which the establishment or alteration of an offshore wind CFD unit is likely to make to the development and sustainability of supply chains, which must include an assessment of the matters referred to in paragraph (2B);