Bidding for second CfD auction to begin within weeks

National Grid confirms start date after Ofgem completes assessment of qualification appeals

National Grid has confirmed that bidding for the second contracts for difference (CfD) auction will begin within weeks after Ofgem completed its assessment of qualification appeals by applicants.

The sealed bid window will be open from 14 to 18 August and participants are expected to be informed of the results of the auction on 11 September.

“On 2 August, Ofgem concluded the qualification appeals process and we have today advised BEIS that the value of the qualifying applicants exceeds the budget and of our intention to run an auction,” National Grid explained in an update on the EMR delivery body website.

Up to £270 million of annual subsidies will be allocated in the auction, which is open to immature “Pot 2” technologies such as offshore wind, wave and anaerobic digestion.

In order to accommodate the qualifications appeals process, National Grid has been forced to conduct the auction according to the slowest of five possible timetables. The delivery body said it will issue a further update to confirm details of the sealed bid window on 11 August.

The auction is likely to be “very competitive”, according to Cornwall Insights chief executive Gareth Evans, who told Utility Week the clearing price could fall well below the £92.50 per megawatt hour strike price offered to Hinkley Point C (2012 prices). 

Speaking at the Utility Week Energy Summit last month, Ofgem chief executive Dermot Nolan said he hoped the auction would clear at a price of “£70 or less” per megawatt hour. 

Author: Tom Grimwood,
Channel: Markets & Trading , Policy & Regulation , Finance & investment

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