First energy generated with Contract for Difference subsidy

The first energy has been generated with a Contracts for Difference (CfD) subsidy at the Charity Farm solar project in Shropshire.

The Low Carbon Contracts Company (LCCC), which is the counterparty for the contracts, has already made the first payment to the operator Lightsource.

“This is an important milestone for LCCC and demonstrates that the full CfD process is in place and operating,” said LCCC chief executive Neil McDermott. “We look forward to our other CFD projects also starting to generate electricity in the months and years to come.”

The project was connected to the grid earlier this month. It is made up of more than 54,000 photovoltaic modules with a combined capacity of almost 12MW.

Charity Farm won the contract at the beginning of 2015 in the first, and so far only, CfD auction, with an index-linked strike price of £79.23/MWh (2012 prices). The strike price is £83.42/MWh in today’s prices.

The LCCC is currently administering 39 CfDs, including those awarded through the non-competitive ‘final investment decision enabling for renewables’ (FIDeR) process. They cover projects with a combined capacity of more than 6GW, using a wide range of technologies including onshore and offshore wind, biomass, solar and energy from waste.

In November, the energy secretary at the time, Amber Rudd, indicated that three further contracts for difference auctions would take place during the current parliament.

During his last budget in March, the then chancellor, George Osborne, announced that £730 million of annual funding would up for grabs in the auctions. He said £290 million of that would be available for ‘less established’ technologies in first auction, which is due to take towards the end of this year.