Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Contracts for Difference definition

What does Contracts for Difference mean? In practice, a contract for difference in the UK electricity market is a long‑term private law contract under which a low‑carbon generator receives (or pays) the difference between an agreed strike price and a market reference price, stabilising revenues over the contract term. In Great Britain (England and Wales and Scotland) “cfd” usually means the statutory Contracts for Difference scheme established under the Energy Act 2013. The counterparty is the government‑owned Low Carbon Contracts company (LCCC). CfDs are awarded through competitive allocation rounds and funded by the electricity supplier obligation. Key legal features include a two‑way payment...

Great Britain CfD scheme tracker: legislation, statutory instruments, consultations, guidance and allocation round outcomes (2015–2026)

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Practice notes

Contracts for Difference (CfD) scheme

The purpose of the Contracts for Difference (CfD) scheme is to deliver long‑term price stability and revenue assurance for low carbon generation projects, and to unlock investment at reduced capital Costs, thereby lowering the burden on consumers of financing the scheme. The CfD is a principal mechanism brought forward by the UK government under Electricity Market Reform (EMR) (see Practice Note: Electricity Market Reform (EMR)), as part of that reform package. The other flagship EMR instrument is the Capacity Market; for further details, see Practice Note: Capacity Market—key features. After EMR, the lead UK government programme charged with reshaping the Great Britain (GB) national electricity market is the ‘Review of Electricity Market Arrangements’ (REMA). For added context on REMA, including how it interacts with the CfD framework, see Practice Note: Review of Electricity Market Arrangements (REMA)—key developments. This CfD tracker tool sets out the present position and latest updates relating to the scheme since June 2015, encompassing consultations, regulatory guidance releases, and significant modifications to the CfD design. Until 14 July 2016, the UK government department with responsibility for energy policy was titled the Department of Energy and Climate Change (DECC). From 14 July 2016,...

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Web page updated on 21/05/2026

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