The UK government is consulting on changes to supply chain plan and Contracts for Difference (CfD) policy in preparation for its fifth auction round.
Launched February 4, the consultation by the Department for Business, Energy and Industrial Strategy (BEIS) aims to garner industry input to make the CfD process “more adaptable and forward looking.”
BEIS is inviting view views on the questions and pass threshold for the supply chain plan (SCP) questionnaire, including the mooted introduction of interviews as part of the process; extending supply chain policy to support emerging technologies, starting with floating offshore wind projects; strengthening its disincentives for non-delivery; and amending Regulation 51(10)(c) of the CfD regulations which govern proposed project commissioning dates.
Currently, developers aiming to build projects of 300MW or more must apply for an SCP statement from the Secretary of State for BEIS to take part in a CfD allocation round.
The aim is to ensure that generators commit to a range of actions that can improve the competitiveness, productivity and capability of their supply chains, and more recently to support local supply chains in alignment with the government’s Build Back Better agenda.
As of the fourth CfD round, an SCP implementation statement and questionnaire must also be signed off by the Secretary of State before a developer’s CfD payments can commence.
The government is now proposing to raise the “pass” mark for this questionnaire process from 50% to 60%, and carrying out interviews to interrogate SCP submissions. BEIS says interviews “could significantly help reduce the chance of failing an application because it would allow amendments to be made to a plan during the assessment process.”
It also moots stronger penalties for failing to deliver on SCP commitments or delivery timelines.
Currently, the penalty for not meeting delivery commitments is to exclude the site from making a CfD application in the first allocation round that it could have otherwise made an application for. BEIS is considering extending this to the next two applicable allocation rounds.
Ensuring that developers make good on timelines and supply chain commitments has been of particular interest as developers pledge large amounts of investment, jobs and infrastructure alongside their CfD bids, and in the recent ScotWind leasing round.
The consultation is available to view on the gov.uk website.
A further call for evidence is also open with regards to the next again CfD auction, or allocation round 6.
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