Francisco del Rio, head of power sales Europe at NTR plc, described the CfD scheme as highly attractive for generators, citing several advantages.
At last month’s Renewables Procurement & Revenue summit in London, hosted by Solar Power Portal publisher Solar Media, industry leaders gathered to discuss the financial landscape for renewables in the UK and Europe. Anastasios Christakis, COO of Queequeg Renewables, told PV Tech Premium that the policy environment for UK solar projects is promising and well-positioned for future development.
Speakers at the event expressed optimism about renewable energy investment in the UK, highlighting the popularity of the Contracts for Difference (CfD) scheme. Del Rio emphasized that the scheme’s long-term contracts - lasting up to 20 years - offer stable cash flows and price predictability, which in turn facilitate financing and debt raising with low interest margins. He also noted that indexation provides a hedge against operational expenses, which are typically tied to long-term inflation.
The scale of the CfD scheme is significant. In its most recent allocation round (7a), a record 155 solar PV projects received CfDs, totaling 4.9GW of capacity at prices 10% lower than the previous round.
Christakis commented that the scheme has been instrumental in making projects bankable. While acknowledging its limitations, he noted that the CfD scheme has proven effective and that lessons from previous rounds can be used to improve future rounds.
Other summit participants suggested that the CfD scheme’s greatest impact will be seen over the long term, as transforming the UK’s energy mix from fossil fuels to clean energy is a gradual process. The CfD scheme has made this transition financially viable for both developers and investors.
Matt Parry, head of power and energy demand at REA, remarked during the summit’s first panel that the UK government is performing well in encouraging long-term investment in renewables, including the expansion of battery storage and long-duration energy storage (LDES).
.svg)
