Contracts for Difference (“CFDs”) were introduced in 2014 as a replacement for the Renewables Obligation as the principal mechanism for subsidising large-scale renewable generation. They are designed to provide long-term revenue stability to low-carbon generators, allowing them to attract investment at a lower cost of capital and therefore at a lower cost to consumers.
This lesson describes the Contracts for Difference scheme for subsidising large-scale renewables and how it is funded by suppliers.