Supporting Contracts for Difference Bidding Strategy

2nd November 2018

When an offshore windfarm developer required help bidding in the UK Government’s Contracts for Difference (CfD) low carbon electricity generation support mechanism, we provided the market intelligence needed to inform its bid.

CfDs are allocated via a competitive auction, with the aim of allocating support to those projects with the lowest cost while remaining largely technology-neutral. Potential bidders need to understand the competitive environment, including the likely number and price of rival bids.

We were commissioned to investigate the potential scale of competition from other technologies. Offshore wind comes under the ‘less established technology’ funding category, which also includes biomass combined heat and power (CHP) and advanced conversion technologies (ACTs). We were commissioned to investigate the potential scale of these other technologies from within the funding category, and identify those that were likely to provide the most competition.

Our work maintaining the Renewable Energy Planning Database (REPD) on behalf of the UK Government Department for Business, Energy and Industrial Strategy has given us an exhaustive knowledge of all renewable energy projects granted planning permission – this allowed us to provide the developer with a complete list of potential competitors.

We also undertook further market analysis to determine the likely price of competing bids and the percentage of the CfD allocation round budget that they would use up.

We provided the developer with the key information needed to plan their bidding strategy, allowing them to make more informed decisions. When they subsequently bid in the second CfD allocation round, they successfully secured the funding support they needed.

Sam Taylor, our Project Director, said:

“This project serves as a good example of how, by utilising our knowledge of planned infrastructure development, we can help our clients understand the complexities of the market. It’s very pleasing to see the development being successful in the auction.”