Contracts For Difference
Implementation Coordination
2
Agenda 21st July 2014
09:30 - 10:00
Introduction & Measures of Success
10:00 - 10:25
CfD Allocation Process Overview
10:25 – 11:10
Systems Overview
11:10 – 11:25
Coffee
11:25 – 12:00
User Registration
12:00 – 12:50
Application, Qualification & Disputes
12:50 – 13:30
Lunch
13:30 – 13:50
CfD Valuation
13:50 – 15:00
Allocation, Audit and CfD Notification
15:00 – 15:20
Coffee
15:20 – 16:00
Implementation Next Steps & Q&A
3
Implementation Coordination Aims
 Enable readiness to participate in the CfD
 Engage with delivery partners
 Agree measures of success
 Develop and maintain implementation issues log
 Communicate policy related issues to DECC
4
The Team
 John Perkins (CfD Manager)
 Paul Mullen
 Yasharn Smith
 Nisar Ahmed
 Giampaolo Panizio
 Ian Woolley (EMR I.S. Manager)
 James Greenhalgh (EMR Stakeholder Manager)
5
Engagement
 Why?
 Understand what implementation planning you need to do
to be ready to participate.
 Develop internal capabilities and processes to ensure
readiness
 How?
 Engage in the process to ensure successful delivery
 Today and future I.C events
August (with LCCC)
Sept (with LCCC)
Oct (With LCCC)
 Bilateral meetings
6
Measures of Success
CfD Implementation Success
What does successful implementation look like?
I.T. systems available in time
 maximum participation in allocation
Positive allocation outcome
7
Measures of Success
 On Your tables please discuss the subject:
 What does successful CfD Implementation look like?
 Appoint a scribe and someone to feedback to the room
 10 mins group discussion
 10 mins feedback
8
Delivery Partners
Setting Legislation &
Energy Policy
Signing and ongoing
management of CfD
contracts
Delivery Body
Regulates Market
(inc EMR)
EMR Settlement Agent
Timeline leading up to first Allocation Round
AF
Publication
& Regs laid
2014
Jun
Initial CfD
Budget
Published
Secondary
Legislation and
license changes
come into force
Jul
Final Supply
Chain
Guidance
Contracts Minor
& Necessary
change request
Aug
Submit
supply chain
plans
DB Publish
Round
Guideline
Sep
Latest date for
Budget Notice,
Allocation Round
Notice and
Framework Notice
Oct
Application
Round
Start
CfD
CfDOverview
Overview
CfD Legislative Update
Energy Act
2013
CfD (Definition
of Eligible
Generator)
Regulations
CfD
(Allocation)
Regulations
Allocation
Framework
Allocation
Round Notice
Framework
Notice
Budget Notice
CfD(Electricity
Supplier
Obligations)
Regulations
CfD (Standard
Terms)
Regulations
EMR(General)
Regulations
EU State Aid Approval
SOS Direction
Regulations
(not currently
laid)
Offtaker of
Last Resort
Regulations
(not currently laid)
Key Round Documents (1)
Allocation
Framework
Allocation
Round
Notice
• Allocation Process
• Valuation Methodology
•
•
•
•
Start and End Dates
Application Closing Date
Delivery Year(s)
Any Technology Restrictions
Key Round Documents (2)
Framework
Notice
• Links an Allocation
Framework to an Allocation
Round
Budget
Notice
• Overall Budget
• Administrative Strike Prices
• May set Minima, Maxima
and Pot (Sub) budgets
CfD Process – End to End
1. PreApplication
Activities
4. Review
7. Sealed
Bids
2. Application
3.
Qualification
5. Appeal
6. Valuation
8. Allocation &
Independent
Audit
9. Allocation
Notification
15
Application
Qualification
Review
Appeal
Valuation
Sealed Bids
Allocation &
Independent
Audit
CFD
Notification
16
Application
Qualification
Review
Appeal
Valuation
Sealed Bids
Allocation &
Independent
Audit
CFD
Notification
17
2. Application
Applicants
3.
Qualification
4. Review
>=300MW submit
Supply Chain Plan
Supply Chain
Plan Assessment
5.
Appeal
6. Valuation
8. Allocation
&
Independent
Audit
7. Sealed
Bids
Minor & necessary
change requests
9. Allocation
Notification
Registration
Requests
Allocation Framework, Allocation
Round Notice & Budget Notices
Training, Production of User
Guides and Round Guidelines
Process
Registration
Requests
Round Opens
1. PreApplication
Activities
Minor & necessary
change process
18
1. PreApplication
Activities
2. Application
Applicants
3.
Qualification
4. Review
5.
Appeal
6. Valuation
Request
Review
Apply
7. Sealed
Bids
8. Allocation
&
Independent
Audit
9. Allocation
Notification
Request
Appeal
Round Variation / Budget Revision Notices
Assess
Eligibility
RO Check
Review
Qualified
Applicants
Appeal
19
1. PreApplication
Activities
2. Application
3.
Qualification
4. Review
5.
Appeal
Applicants
6. Valuation
7. Sealed
Bids
8. Allocation
&
Independent
Audit
9. Allocation
Notification
Submit Sealed
bids if requested
Round Variation / Budget Revision Notices
Value
qualified
applicants
Request
sealed bids
if required
Allocation &
Independent
Audit
20
1. PreApplication
Activities
2. Application
3.
Qualification
4. Review
5.
Appeal
7. Sealed
Bids
6. Valuation
8. Allocation
&
Independent
Audit
Applicants
9. Allocation
Notification
Contract
Signature
CfD
Notification
Round Closes
Allocation
Reports Review
Issue
Contract
s
21
CfD Process – End to End
1. PreApplication
Activities
4. Review
7. Sealed
Bids
2. Application
3.
Qualification
5. Appeal
6. Valuation
8. Allocation &
Independent
Audit
9. Allocation
Notification
22
Systems
High Level Architecture Reminder
External
Parties
Energy Industry
& Trade Associations
Comms Channels
Portal
Alerts & Notifications
Existing
Generators
Prospective
Generators
Web
DSR
Aggregators
Northern Ireland
Parties (SONI)
Ofgem
DECC
Counterparty &
Settlement Agent
Secure Email
Public
Participants (market)
Private
User
Authentication
Authentication
Service
FAQ & Guidance
Administration System
CRM
CfD Admin
CM Admin
PreQualification
Eligibility
Microsoft Dynamics
CRM plus
SharePoint Portal
Delivered by Wipro
Companies
& Users
Allocation
Comms &
Queries
Appeal
Mgmt
Reporting
Round
Reporting
Auction
System
Obligation
Tracking
Registry
CfD
Contracts
Auction Service
Eligibility
Documentation
CMU
Obligations
Power
Auctions
solution
Delivered by
24
IBM
Security
 Policies
 Solutions are designed to comply with National Grid Security Standards and Codes of
Practice which are all Government and CPNI approved
 Data Centres
 All data centres used are ISO 27001/2 standards and SSAE16 Type II certified
 Personnel
 All National Grid, Wipro and IBM personnel are bound by our security standards and
associated background checking
 Channels
 All National Grid/Participant/Delivery Partner exchanges will be via https secure
Internet channels or secure email
 Intra-Data Centre communications are via secure VPN
 Intrusion Protection
 Anti Virus and Malware protection on all servers, Network Security Zones, Edge
Network Security, Deep Packet Inspection, Core Firewall Multi Layer Switches
 Authentication
 User name, password and PIN number required, Maintained via segregated ADFS
 PIN authentication through SMS
 Password 8 digits, at least 1 upper case, 1 lower case and 1 number or special
character, changed every 90 days
25
System Requirements
 The minimum system requirements for Participant system access
Description
Portal
Downloads
No executable downloaded code or cookies
Supported Browsers
• IE 11, 10, 9, 8
• Google Chrome (latest version)
• Mozilla Firefox (latest version plus immediate
previous version)
• Apple Safari (latest released version)
Operating Systems
Microsoft Win7/8
Internet Connection
Full Internet connection
Back-up internet connection recommended
Microsoft Office
Microsoft Office 2010 or higher recommended
* XP is not recommended for security reasons but we will check that screens display correctly in XP. However, if you do
choose to use XP, at your own risk, please use Chrome (not IE8) in order to have TLS 1.1
26
Support Process
DB CM / CfD Team
Participant & 3rd
Parties
Support Process: Admin & Auction Systems
Yes
Issue / Query
Call Delivery
Body Help Desk
Start
Business Issue
Not
Resolved
Resolve
Business
Issue / Query
Log Call Details
Technical
Issue
Not
Resolved
Confirm
Resolution?
Update User
and Update
Call Log
Inform Provider
Issue Not
Resolved
Call log
Closed
Business
End
Business or
Technical Issue?
Contact IS
Help Desk
End
IS Service
Provider
IS Help Desk
Technical
Log Call
Pass Call to
Service
Provider
Receive
Create /
Update Log
Update Log
and Close
Call
Resolve Issue
Inform DB and
Update Heldesk
27
Service Characteristics
Description
Portal
System Available for use
24*7
System Supported Period
8am – 6 pm
Contact Us Telephone Support
8am – 6 pm
System Availability (in supported period)
Recovery Time
“Hot” Disaster Recovery
99.9%
4 Hours
Yes (Refresh)
28
Testing
 Our system will undergo extensive testing to include;
 System Testing
 All development will be tested before being submitted for UAT
 User Acceptance Testing
 Full role base testing will undertaken prior to deployment and go-live
 Performance Testing
 System performance will be tested through use of load simulation tools
 Regression/Integration Testing
 All code will be tested to ensure integration and end-to-end function
 Penetration Testing
 Full penetration testing will be undertaken by our accredited testing
agent, Portcullis
29
Training
 System Specific Training will be offered close to launch of
the system
 Training is not mandatory but encouraged
 Registration and Qualification:
 User manuals
 Training will be modular Webinar style hosted events
 Webinar recordings available on-line
 A dedicated EMR Helpline will be available to contact the
Delivery Body
30
Contracts For Difference
Coffee Break
CfD Process – End to End
1. PreApplication
Activities
4. Review
7. Sealed
Bids
2. Application
3.
Qualification
5. Appeal
6. Valuation
8. Allocation &
Independent
Audit
9. Allocation
Notification
32
High Level Architecture Reminder
External
Parties
Energy Industry
& Trade Associations
Comms Channels
Portal
Alerts & Notifications
Existing
Generators
Prospective
Generators
Web
DSR
Aggregators
Northern Ireland
Parties (SONI)
Ofgem
DECC
Counterparty &
Settlement Agent
Secure Email
Public
Participants (market)
Private
User
Authentication
Authentication
Service
FAQ & Guidance
Administration System
CRM
CfD Admin
CM Admin
PreQualification
Eligibility
Microsoft Dynamics
CRM plus
SharePoint Portal
Delivered by Wipro
Companies
& Users
Allocation
Comms &
Queries
Appeal
Mgmt
Reporting
Round
Reporting
Auction
System
Obligation
Tracking
Registry
CfD
Contracts
Auction Service
Eligibility
Documentation
CMU
Obligations
Power
Auctions
solution
Delivered by
33
IBM
Portal – Look & Feel
Contracts for Difference
34
Registering for CfD Qualification
 Ensures individual acting on behalf of an organisation is
known, and authorised to do so
 High Level Principles
 All CfD Qualification Applications will be made through
the National Grid “EMR Portal”
 All Companies that wish to participate for Contracts for
Difference will need to register within this system
 Initial company registration through which company
details will be cross-checked by National Grid
 Thereafter other “company users” of the Portal may be
added by the main company administrator user(s)
35
Registering Options
 Companies will have three options for initial registration
 If you are already registered for the Capacity Mechanism
AND you want the same Main Admin for CM and CfD
Your existing registration can be extended to cover CfD
 Once the system is live you can register via the system
The process will take two days to enable validation checks
 You can register off-line in advance of system go-live via
the bulk upload process
You will be able to use the system from go-live day
36
Registering Data Requirements
Company Details
Field Name
Mandatory
Company Name
Y
Company
N
Registration No.
VAT Registration
N
Number
Company
Y
Registration type
Address 1
Y
Address 2
N
Address 3
N
City
Y
Post Code
Y
Country
Y
Authorised Person Details
Field Name
Mandatory
First Name
Y
Last Name
Y
Landline No.
N
Email
Y
Role/Position of the
authorised person
Y
Address 1
Address 2
Address 3
City
Post Code
Y
N
N
Y
Y
Country
Y
Role of the
Authorised Person
Y
Main Administrator Details
Field Name
Mandatory
First Name
Y
Last Name
Y
Landline No.
Mobile No.
(Mandatory for
SMS messaging)
Email
Address 1
Address 2
Address 3
City
Post Code
Country
N
Y
Y
Y
N
N
Y
Y
Y
37
Registration Form – Via the System
38
User & Sub-company Registration
•
•
•
•
The Company Administrator for each company will be set up by National
Grid on receipt of an authorised request. Including password/PIN re-sets
The Company (or Sub-Company) Administrator will typically be a
manager within the participant EMR organisation
The Company Administrator (or Sub Company Admin) can then assign
and manage other users within the company
User Password/PIN resets are managed by the Company Administrator
Company XYZ
Bulk Upload
•
•
•
•
•
•
We will provide a bulk upload facility to enable early preparation of
Registration and Application data
Based upon offline .csv files exchanged via email. National Grid will
upload data for validation by participants
We will provide templates for;
1.
Company and Main Administrator Registration
2.
User and Sub-company Registration & Privileges
3.
Qualification Data
4.
CMU Data
We would like all participants to use Template 1 (above) for Company
and Main Administrator Registration
We expect that use of templates 2 – 4 (above) will only be of value for
those with multiple applications/CMUs
Documents and files to be submitted must be uploaded manually
CfD Process – End to End
1. PreApplication
Activities
4. Review
7. Sealed
Bids
2. Application
3.
Qualification
5. Appeal
6. Valuation
8. Allocation &
Independent
Audit
9. Allocation
Notification
41
CfD Qualification
Meet Eligibility
Requirements
(General, additional
& supplemental)
To be a
qualifying
applicant
Not be an
Excluded
Applicant
Provision of
other
information/data
42
CfD Qualification – Eligibility Requirements
Connection
Agreement(s) /
Countersigned
Offer(s)
Planning
Permission(s)
Supplemental
Requirements for
phased Offshore
projects
Supply Chain Plan
>=300MW
43
CfD Qualification – Connection Agreements
Direct
Connection
Partial
Connection
Islanded
CFD Unit
• Agreement(s) for connection with TSO and/or
/DNO for >=75% of capacity
• Agreement(s) between Private Wire
Generator and Private Wire Network Operator
• Agreement(s) between Private Wire Network
Operator and TSO/DNO
• Agreement(s) between Private Wire Generator
and Private Wire Network Operator
• Confirmation that no connection agreement
applies or is to apply
44
CfD Qualification – Planning Permissions
Section 36
Development
Order /
Transport and
Works Act Order
Planning
Permission
Crown Estate
Agreement for
Lease / Lease
(Offshore only)
Marine Licence
Marine Licence
Permissions must relate to CfD Unit and getting the power
to the transmission or distribution or private wire network
No requirement to provide permissions for the TO/DNO works
45
CfD Qualification - Exclusions
CCS and Nuclear
AD, Hydro, Onshore Wind, Solar =< 5MW
Non GB
Not to be in receipt of another subsidy (RO, CFD, CM, NFFO, RHI if
EfW with CHP) except:
RO accredited registering additional capacity >=5MW
RO accredited registering subsequent offshore phases
Biomass co-firing stations can convert from RO to CFD
46
CfD Qualification – Other Information/Data
Valid
Incorporation
Evidence of incorporation – e.g.
Company Registration and
VAT/Tax Registration
Additional Information (inc.)
 Name and address
 Project name and location
 Capacity (MW)
 Target Commissioning Date
and start of Target
Commissioning Window
Contract
terms
Version number of standard or
modified terms
 For LCCCo to complete
CfD contract
47
CfD Qualification – Application process
5. System
closure
1.
Application
via system
4.
Application
submitted
2. User
Registration
3. Upload
documents
48
CfD Qualification – Eligibility process
7. Notify
Applicant via
system
1. Application
Closing Date
2. 10 working
days to determine
if qualifying
application
6. Issue
determination to
Applicant
5. Take into
account any
contradictory
evidence
3. Assess
application
4. Verification
checks
49
Applicant Data & Evidence requirements – Planning Permission(s)
Planning Permission(s) (including
Crown Estate Lease)
Full documented evidence of planning permission(s)
Evidence must clearly state location, MW, dates
and technology (where not stated, indicate why)
Planning permission(s) for CfD Unit and works to
allow electricity to be supplied to network (unless
being undertaken by someone other than
applicant)
50
Applicant Data & Evidence requirements – Connection Agreement(s)
Connection Agreement(s) /
Countersigned Offer(s)
Declaration of connection type
Full documented evidence of connection
agreement(s)/countersigned offer(s)
Evidence must clearly state location, MW, dates
and technology (where not stated, indicate why)
If “islanded” or “partial”, frequency of provision of
metered data volumes
If “islanded”, declaration that no connection
agreement is or is to apply
51
Applicant Data & Evidence requirements
• Full copy of approval certificate
Supply Chain Plan
>=300MW
Supplemental
Requirements for
phased Offshore
Projects
Incorporation
• Evidence must clearly state location, MW, dates and
technology
• System Validation
• Full copy of certificate of incorporation and VAT
Registration certificate (or equivalent if non UK)
52
Applicant Data and Evidence requirements - Exclusions
Certify that not an Excluded Application
Certify that not in CM, NFFO or CfD
DB cross check against public registers
Either certify that not in RO, or if certify that in RO confirm
which type of dual scheme plant applies
DB/Ofgem cross checking process
53
Other Applicant Data & Evidence
Information required for LCCC to complete CfD
contract
Name and contact details of Applicant/Agent/Person
entering into CfD Contract
Project specific details e.g. MW, location
Certify that information provided in Application is
true and correct
54
CfD Process – End to End
1. PreApplication
Activities
4. Review
7. Sealed
Bids
2. Application
3.
Qualification
5. Appeal
6. Valuation
8. Allocation &
Independent
Audit
9. Allocation
Notification
55
CfD Qualification – Reviews
Applicant
DB
Outcome
• Submit Review Notice via system within 5 working days
• Cover only those areas subject to non qualification determination
• No new evidence but can clarify original evidence
• 10 working days from date of review notice to reply to Applicant
• Notify Qualifying Applicants that in receipt of review notices
• Non qualification review notice which overturns or upholds original decision
and provides reasons for the determination
• Applicant to log into system and view DB decision
56
CfD Qualification – Reviews
Concise statement
identifying dispute
Summary of grounds
for dispute
Review
Requirements
Succinct
presentation of
arguments
No new documentary
evidence but can
clarify original
evidence
Schedule listing the
documents submitted
57
CfD Process – End to End
1. PreApplication
Activities
4. Review
7. Sealed
Bids
2. Application
3.
Qualification
5. Appeal
6. Valuation
8. Allocation &
Independent
Audit
9. Allocation
Notification
58
CfD Qualification – Appeals
• Submit Appeal and Review documents to Ofgem directly
Applicant • 5 working days to submit an appeal to Ofgem
Ofgem
DB
• 30 working days to respond
• Allocation may proceed if overrunning
• Appeal Statement to Ofgem
• Notify qualifying applicants that there are appeals in progress
• Update Appeals Register once CfD Notifications have been issued
• Can overturn or uphold original decision and provide reasons for the
determination
Outcome • Ofgem advise Applicant and DB stating determination and date of
determination
59
CfD Qualification – High Court
• 28 days to appeal to High Court
Applicant
High Court
• High Court could ask Authority to reconsider their
decision or direct DB to reinstate as a Qualifying
Applicant
60
Contracts For Difference
Lunch
CfD Process – End to End
1. PreApplication
Activities
4. Review
7. Sealed
Bids
2. Application
3.
Qualification
5. Appeal
6. Valuation
8. Allocation &
Independent
Audit
9. Allocation
Notification
62
CfD Process – End to End
1. PreApplication
Activities
4. Review
7. Sealed
Bids
2. Application
3.
Qualification
5. Appeal
6. Valuation
8. Allocation &
Independent
Audit
9. Allocation
Notification
63
CfD Budget
Levy Control Framework caps for Low Carbon Support
LCF Budget includes Renewables Obligation (RO), Small Scale Feed in Tariff,
FIDeR & generic CfD.
Initial budget to be published July 2014, final budget anticipated late
September 2014.
64
CfD Allocation – Round 1
Pot 1 Established
Technologies
Pot 2 - Less
Established
Technologies
Potential Pot 3 Established
Technologies
Onshore Wind (>5 MW)
Offshore Wind
Biomass Conversions
Solar Photovoltaic (>5 MW)
Wave
Tidal Stream
Energy from Waste with
CHP
Advanced Conversion
Technologies
Hydro (>5MW and <50 MW)
Anaerobic Digestion
Landfill Gas
Dedicated biomass with
CHP
Sewage Gas
Geothermal
Scottish island onshore wind projects
Potential Pot 4
100MW
Minimum
across
the RO &
CfD
Valuation Formula
• Strike Price minus Reference Price
X
• e.g. Transmission losses, hours to
days.
• Set out in Allocation Framework
X
• e.g. Load factors
• Set out in Allocation Framework
X
• Provided by Applicant
CfD Valuation
Budget Assessment;
by Pot, total value / minima / maxima
in each year
DB Notification
to SoS (DECC)
Allocation
SoS (DECC) increase budget?
67
CfD Process – End to End
1. PreApplication
Activities
4. Review
7. Sealed
Bids
2. Application
3.
Qualification
5. Appeal
6. Valuation
8. Allocation &
Independent
Audit
9. Allocation
Notification
68
CfD Allocation – Process Overview
• Check if Auction is required. If yes, applicants notified to submit Sealed bids
Step 1
• Run Unconstrained/Constrained allocation
Step 2
• Independent Audit of DB Calculations
Step 3
Step 4
• SoS reviews; Proceed, Re-run or Cancel Allocation Process.
• DB CfD Notifications : (LCCC & Applicants)
Step 5
69
CfD – Decisions to run Auction
NO Auction
MAX (only)
Auction
MIN Auction
General
Pot Auction
If…
If…
If…
If…
No Pot Breach
No Pot Breach
 General Pot
Breach
And…
And…
 General Pot
Breach
And…
 No Breach of
Techs subject to
MAX (MW)
 Techs exceed
MAX limit (MW)
 Techs Subject
to MIN can
breach (MW)
 Techs Subject
to MIN can
breach (MW)
 All
Unallocated MAX
Rejected
 Techs
Subject to MIN
breach (MW)
 Unallocated
MINs move to
General Pot
Auction
 Unallocated
MINS
considered
 MAX
constraints
apply
70
Valuation of Qualifying
Applications
[per POT]
Constrained Allocation
MAX only
Auction
Unconstrained Allocation
General Auction
MIN Auction
POT
Auction
CfD Allocation – General Principles
• Pot /Budget (Cannot Be Exceeded Except for Pending
Budget
Projects)
Rule
Constraint
• Only competitive where binding constraint
(E.g. Pot/MIN/MAX)
• All projects in same Pot will compete on strike price
basis, regardless of delivery year
Across
Years
Bid
Prices
Pay as
Cleared
Increasing strike price bid
16/17
18/19
15/16
17/18
16/17
16/17
15/16
17/18
15/16









• Projects will be awarded in order of lowest to highest
strike price
• Clearing Price set by most expensive successful project
in each year (subject to cap at the Technology Admin
Strike price).
15/16
16/17
17/18
18/19
CfD Allocation – Sealed Bids
Sealed Bids
Bidders submit the lowest strike price they are willing to accept.
General
Flexible Bids
 5 Days sealed bid submission
window
 Submit combination of different
bid price, capacity, TCW,& TCD
 No bids above the Admin Strike
Price
 Max 10 Bids per project
 Withdraw & re-submit bids during
submission window
 No bids accepted after window
closes
 System will default Admin Strike
price if none is submitted
 Must be same Delivery year or
later than original application
 Must be same capacity or less
than original application
CfD – Competitive Allocation Principles
Used to identify
Successful applicants and
Strike Prices
Years can close
independently
Allocation in ascending
price order (across years)
Minimum allocated first
Sealed bid process
(includes bidder flexibility)
Each delivery year
has a separate
clearing price
Triggered by breach of
Budget or Maxima
74
Increasing bid price
CfD Allocation – Auction (MINIMA)
Project
SP
Bid
Admin
SP
Del
Yr
MW
Group
K
123
130
17/18
150
GEN
J
120
140
17/18
45
MIN
I
119
120
17/18
50
MAX
H
118
140
15/16
30
MIN
G
118
125
16/17
40
GEN
F
117
125
18/19
200
GEN
E
116
120
16/17
500
MAX
D
115
140
15/16
45
MIN
C
102
120
17/18
110
MAX
B
93
100
18/19
70
GEN
A
85
90
15/16
65
GEN
MIN Capacity set at 100 MW
MIN Requires Auction since
(D + H + J) MW is > 100MW,
and General Auction is triggered

The valuation of ‘D’ & ‘H’ is compared
against pot value to ensure both can be
allocated

‘D’ & ‘H’ Provisionally allocated with a
Cleared price of 118 in 15/16

‘J’ Cannot be accepted in MIN auction and
is to be considered in general auction
MIN = 100 MW
118
Maximum Value
of MINIMA
This project sets clearing price
115
15/16
16/17
17/18
18/19
CfD Allocation – Auction (General)
MAX Capacity = 600 MW
SP
Bid
Admin
SP
Del
Yr
MW
K
123
130
16/17
150
GEN

J
120
125
15/16
45
MIN

I
119
120
17/18
100
MAX

G
118
125
16/17
40
GEN

F
117
125
15/16
200
GEN

E
116
120
16/17
500
MAX

Increasing bid price
Project
Group
MAX Exceeded 630 > 600
Close Auction to all MAX
B
102
120
17/18
30

B
93
100
18/19
200
GEN

A
85
95
15/16
70
GEN


Stack Bids in order of increasing SP

Start Allocating to Bid of lowest Strike Price

All Successful projects delivering in same
year gets the same cleared price except
MINs - (Subject to Admin Strike Price per
Tech)

MAX
MAX limits apply
I
Budget
C
CP = 93
Reject all
other
projects
for 15/16
Close Year
F
CP = 117
A
CP =95
C
K
CP = 123
G
CP = 123
E
CP = 120
CP =102
MIN = 100 MW
Maximum
Value of
MINIMA
15/16
16/17
** CP = Cleared Price
17/18
18/19
CfD –Allocation Other Detailed Points
Bidder Flexibility
Pending Bids
Tiebreakers
77
Project
SP Bid
Del Yr
MW
A2
115
16/17
60
C2
112
17/18
45
E2
108
18/19
70
A1
105
17/18
75
C1
100
17/18
60
D2
97
16/17
60
D1
94
16/17
80
H1
93
17/18
35
B2
92
16/17
50
F1
90
17/18
80
E1
88
16/17
63
B1
85
15/16
50
Close Year
A2
C2
Strike Price Bids
Flexible Bids- Increasing Price
CfD Allocation – Flexible Bids
Next
cheapest
bid is for
same
project
Budget
would be
exceeded
in 16/17
Reject all
other bids
for 16/17
Close Year
D2
D1
A1
C1
Next cheapest
bid is not for
same project

H1
B2
F1

Bids are assessed in order of strike price bid
(cheapest first) . If they fit the budget profile (and
don’t exceed MAX) they are accepted.

Same Commissioning Year Flexibility

If a bid is successful, remove from stack all other
bids relating to same project
E1
B1

15/16
E2

16/17


Budget
would be
exceeded in
17/18
No budget or MAX breach,
accept and remove other
‘B’ bids from stack
17/18
18/19
CfD Allocations – Tiebreaker Rules
 Tie-breaker rules applies where 2 or more projects with the same strike
price bid, both cannot be awarded a CfD without exceeding budget limits
Confirm projects
with same S.P would
exceed budget
Assess all
combination of tied
projects which
exceeds budget
Consider other flex
bids for
unsuccessful
projects
Remove other flex
bids for successful
projects
Choose combination
of projects which
best uses budget
For further ties –
Random number
generator is to be
used
CfD Allocation to Pending Applicants
 Pending Applicants will be required to submit bids during the Bid
Submission Window (If Tech is subject to an Auction)
 Pending Bids will only be opened (used) by the DB if the Authority
concludes the applicant is a Qualifying Applicant
 If following CfD Notifications the Pending Applicant becomes a
Qualified Applicant, and
 If No Auction - the Administrative Strike Price would be applicable to
the Pending Application
 If Auction – The Pending Applicants lowest bid had to be equal to or
lower than the clearing price for the Auction (Relevant Pot & Year); in
order to be awarded a CfD.
CfD Allocations Audit & SoS Actions
 DB will appoint Independent Auditors (IA)
What the Independent Auditor Will Do
 Unconstrained Round (for each Pot)
 Verify if the decision not to Auction is correct
 Constrained Allocation, (for each Pot)
 Verify if the decision to go Auction is correct
 Verify if Sealed Bids (Flexible Bids) were used appropriately
 Verify if the Auctions rules were used appropriately to decide result of the Auction
SoS Actions
 SoS review Audit Report and DB Recommendations
 SoS may choose to:
 Proceed to Allocation Notifications
 Re-run Part/All of the Allocation Process
 Terminate & Cancel the Allocation Round
81
CfD Allocations Notifications
 Following successful Allocation process, DB will notify
 Unsuccessful Applicants
 CfD Counterparty of all Successful Allocation
To Include all relevant applicant details submitted at application
Strike Price, Delivery Dates, Capacity relevant to CfD award
 Successful Applicants of their CfD Award
Strike Price, Delivery Dates, Capacity relevant to CfD award
 Following Allocation Notifications, DB will
 Publish Allocation Round Report
 Publish CfD Appeals Register (If Applicable)
82
Contracts For Difference
Coffee Break
Implementation Next Steps
CfD Process – End to End
1. PreApplication
Activities
4. Review
7. Sealed
Bids
2. Application
3.
Qualification
5. Appeal
6. Valuation
8. Allocation &
Independent
Audit
9. Allocation
Notification
85
Implementation Coordination Calendar
Eligibility and Allocation 21 July 2014
Application and System Readiness Aug 2014
Applicant and System Readiness Sept 2014
System webinar Sep/Oct 2014
Implementation progress Oct 2014
86
Go-Live Process – Applicant Support
User Registration
Guidance
•
•
•
Pragmatic Guide to
Qualification and
Allocation (1 Sept)
FAQs (1 Sept)
Round Guidance
•
•
Draft 1 Sept
Final 30 Sept
•
•
Companies register and
create Users.
System available late
Sept/early Oct
Training
•
•
Screen cast late Sept
IS Manuals
Industry Readiness
 What else do you want / need from DB to be ready for
October?
 john.perkins3@nationalgrid.com
CfD Manager
 james.greenhalgh@nationalgrid.com
EMR Stakeholder Manager
Industry Participants CfD Success Factors
Category
Measures of success
Systems
Systems to be available in a timely manner and have ability
to allow multi-logon access.
Systems
The system should be user friendly and be easy to use for all
participants with good guidance notes and documentation.
Navigation in the system should be easy to follow.
Systems
Terminology should be consistent between that used in the
system and policy documentation.
Systems
Have a dedicated central helpdesk for applicant queries and
technical support.
Systems
The systems and process should minimise the risk of
disputes and the DECC should not radically change the rules
and timelines.
Systems
Ensure that the system is reliable and any pinch points are
resolved beforehand to avoid unavailability during critical
periods.
89
Industry Participants CfD Success Factors
Category
Measures of success
Process
Have an effective way of providing feedback to industry
participants for key updates related to CfD applications.
Process
Useful to have worked examples which step through the
process of application of a CfD.
Process
Guidance documentation on pre-conditions and
requirements on what a CfD applicant needs to provide for
qualification to be made available so that there is no room
for un-necessary errors leading to disqualification.
Process
One common channel of communication between the
various parties to issue information / updates to industry
participants.
Process
Transparency provided on notices and relevant publications
(e.g. budget notice).
90
Key documents
EMR Statutory Instruments
 The Contracts for Difference (Allocation) Regulations 2014
http://www.legislation.gov.uk/id/ukdsi/2014/9780111116777
 The Contracts for Difference (Definition of Eligible Generator) Regulations
2014 http://www.legislation.gov.uk/id/ukdsi/2014/9780111116807
 The Contracts for Difference (Standard Terms) Regulations 2014
http://www.legislation.gov.uk/id/ukdsi/2014/9780111116838
 The Contracts for Difference (Electricity Supplier Obligations) Regulations
2014: http://www.legislation.gov.uk/ukdsi/2014/9780111116784/
 The Electricity Market Reform (General) Regulations
2014 http://www.legislation.gov.uk/id/ukdsi/2014/9780111116791
 The Electricity Capacity Regulations 2014:
http://www.legislation.gov.uk/ukdsi/2014/9780111116852/
Key documents
Associated Supporting Documentation
 Implementing EMR This publication provides stakeholders with a
comprehensive overview of EMR policy at a point where the implementing
secondary legislation is laid before Parliament.
https://www.gov.uk/government/publications/implementing-electricity-marketreform-emr
 New electricity interconnection to GB – operation and revenues: This
independent report shows potentially significant revenues are available on the
basis of price arbitrage, offering confidence to investors.
https://www.gov.uk/electricity-network-delivery-and-access#offshore-electricitynetworks-development
 Analysis of CfD Supplier Obligation funding options – Redpoint Energy:
This report provides an assessment of CfD payment volatility and reserve fund
size to support analysis on Supplier Obligation design and estimated costs and
benefits as detailed in the Supplier Obligation Impact Assessment.
https://www.gov.uk/government/publications/electricity-market-reform-contractsfor-difference
Key documents
Associated Supporting Documentation
 Updated draft Allocation Framework: This sets out the allocation process
including the auction rules and the valuation formula that will be used in the
allocation process. A final version of the Allocation Framework will be published in
advance of the first allocation round opening for application. Available at:
https://www.gov.uk/government/publications/electricity-market-reform-contractsfor-difference
 Updated High Level Summary of the Allocation Process This summarises
how the Allocation Regulation and Allocation Framework work together to
establish the allocation regime. Available at:
https://www.gov.uk/government/publications/electricity-market-reform-contractsfor-difference
 The Government response to the October 2013 EMR Consultation on
proposals for implementation:
https://www.gov.uk/government/consultations/proposals-for-implementation-ofelectricity-market-reform
Key documents
Associated Supporting Documentation
 The Government Response to the January Code and License consultation:
https://www.gov.uk/government/consultations/emr-consultation-on-industry-codeand-licence-modifications
 The Government Response to the April Balancing and Settlement Code
modifications consultation: https://www.gov.uk/government/consultations/emrmodifications-to-balancing-and-settlement-codebsc-subsidiary-documents
 The Government Response to the March Low Carbon Contracts Company
and Electricity Settlements Company operational costs consultation:
https://www.gov.uk/government/consultations/consultation-on-the-emr-operationalcost-levies
 The Government Response to the March Consultation on directions to offer
Contracts for Difference:
https://www.gov.uk/government/consultations/electricity-market-reform-emrcontracts-for-difference-regulations