Referral of the proposed Contracts for Difference for Renewables Allocation Round 8 scheme by DESNZ

4 September 2026: The SAU has published its report providing advice to DESNZ concerning the proposed CfD Scheme AR8. The report sets out the SAU’s evaluation of DESNZ’s Assessment of Compliance of its proposed scheme with the requirements set out in the Subsidy Control Act 2022.

29 July 2026: The SAU has accepted a request for a report from DESNZ concerning the proposed CfD Scheme AR8. This request relates to a Subsidy Scheme of Particular Interest.

The SAU will prepare a report, which will provide an evaluation of the DESNZ assessment of whether the subsidy scheme complies with the subsidy control requirements (Assessment of Compliance). The SAU will complete its report within 30 working days.

Information about the subsidy scheme provided by DESNZ

The CfD scheme has existed since 2014 and aims to encourage low carbon electricity generation. CfDs are long-term (15 or 20 year) contracts between a low carbon electricity generator and the CfD counterparty - the Low Carbon Contracts Company (LCCC). This is the eighth allocation round (AR8) of the Scheme.

Under the Scheme, the generator sells its electricity at a variable market price. When the reference price (a proxy of the wholesale electricity price) is below the strike price agreed in the CfD contract, the generator receives a top-up payment from LCCC for the difference (funded by a levy on electricity suppliers). When the reference price is above the strike price, the generator must pay back the difference to LCCC.

CfD contracts are typically awarded through a competitive allocation round, where companies submit bids in relation to new generation capacity, and the lowest bids are accepted until the overall budget for the allocation round is reached.