The Contracts for Difference (Miscellaneous Amendments) (No. 2) Regulations 2025
The 2025 regulations amended the Contracts for Difference and Electricity Market Reform regulations, adding biomass stations as eligible generators and empowering the Secretary of State to enforce sustainability improvements in CFDs.
The Contracts for Difference (Miscellaneous Amendments) (No. 2) Regulations 2025 amend existing regulations governing Contracts for Difference (CFDs) in the UK energy market.
Key changes include expanding the definition of 'eligible generator' to encompass biomass stations, thereby extending support for renewable energy production; and granting the Secretary of State the authority to direct CFD counterparties to implement amendments related to sustainability obligations in CFDs entered into after the regulation's commencement date.
These amendments aim to promote sustainable energy sources and enhance the environmental considerations within the energy market.
Arguments For
Enhancing Renewable Energy Deployment: The inclusion of biomass stations as eligible generators broadens the scope of renewable energy support, potentially increasing the adoption of sustainable energy sources.
Strengthening Sustainability in CFDs: The amendment allows the Secretary of State to mandate improvements in sustainability aspects of Contracts for Difference (CFDs), aligning market mechanisms with environmental goals. This reflects a growing policy emphasis on environmental responsibility in energy markets.
Legal Clarity and Consistency: These amendments clarify existing regulations, reducing ambiguity and improving the predictability and efficiency of the energy market. The changes are explicitly based on the powers granted under the Energy Act 2013.
Improved Market Functioning: By clarifying the eligibility criteria and enabling the Secretary of State to address sustainability issues in CFDs, the regulations aim to foster a more efficient and environmentally conscious energy market.
Arguments Against
Potential Regulatory Burden: The additional requirements placed on CFD counterparties and the expanded definition of eligible generators might increase administrative costs and compliance burdens.
Unintended Consequences: The power granted to the Secretary of State to mandate CFD amendments, while intended to improve sustainability may, in unforeseen ways, negatively impact market participants or create unintended distortions in the electricity market.
Limited Scope of Biomass Inclusion: The definition of biomass stations may need further clarification to ensure all environmentally suitable resources are properly included.
Alternative Approaches: Alternative policy instruments, such as direct subsidies or carbon pricing, could achieve similar outcomes with different potential impacts.
- Citation, commencement and extent (1) These Regulations may be cited as the Contracts for Difference (Miscellaneous Amendments) (No. 2) Regulations 2025 and come into force on the day after the day on which they are made. (2) These Regulations extend to England and Wales, Scotland and Northern Ireland.
These regulations are titled the Contracts for Difference (Miscellaneous Amendments) (No. 2) Regulations 2025.
They come into effect the day after their enactment and apply across the UK.
- Amendment of the Contracts for Difference (Definition of Eligible Generator) Regulations 2014 (1) The Contracts for Difference (Definition of Eligible Generator) Regulations 2014 are amended as follows. (2) In regulation 2 (interpretation), in paragraph (1), at the appropriate place, insert— ““biomass station” means a generating station which is fuelled by solid biomass;”. (3) In regulation 3 (definition of eligible generator), in paragraph (5), in the definition of “carry out a generating activity”— (a) omit the “or” after sub-paragraph (c); (b) after sub-paragraph (d), insert— “or the continuation of electricity generation by an existing biomass station.”. (4) In the Schedule (eligible generating stations), in paragraph 1, before sub-paragraph (b), insert— “(aa) a biomass station;”.
This section amends the 2014 Contracts for Difference (Definition of Eligible Generator) Regulations.
It adds a definition for "biomass station", specifies that "carrying out a generating activity" includes continuing electricity generation from existing biomass stations, and adds biomass stations to the list of eligible generating stations.
This expands the types of renewable energy sources qualifying for support.
- Amendment of the Electricity Market Reform (General) Regulations 2014 (1) The Electricity Market Reform (General) Regulations 2014 are amended as follows. (2) In the heading of regulation 18 (power to direct a CFD counterparty), after “counterparty”, insert “following revision to standard terms”. (3) After regulation 18, insert—
- Power to direct a CFD counterparty: CFDs under section 10 of the Act (1) This paragraph applies in relation to a CFD entered into by virtue of a direction given under section 10(1) of the Act after the date on which this regulation comes into force. (2) The Secretary of State may give a notice (“a regulation 19 direction notice”) to a CFD counterparty that requires the CFD counterparty to implement amendments relating to the sustainability obligations in a CFD of the sort described in paragraph (1). (3) But the Secretary of State may not give a regulation 19 direction notice if the Secretary of State is of the opinion that the amendments would reduce or undermine sustainability obligations in a CFD to which the notice applies. (4) A regulation 19 direction notice must specify— (a) the amendments the CFD counterparty must effect, (b) the CFDs in relation to which the amendments must be made, and (c) the date by which the amendments must take effect. (5) The Secretary of State must publish a regulation 19 direction notice.”.
This section amends the 2014 Electricity Market Reform (General) Regulations.
It adds a new regulation (regulation 19) that gives the Secretary of State the power to direct a counterparty to a Contracts for Difference (CFD) to make changes related to sustainability obligations in the CFD. The Secretary of State cannot issue such a direction if, in their opinion, it reduces sustainability obligations.
The directive must include the necessary amendments, which CFDs they apply to, and by when they must be implemented; and the directive itself must be published.
Related
The Employment Rights Act 2025 (Commencement No. 6 and Transitional and Saving Provisions) Regulations 2026
Commenced workplace sexual harassment protections and expanded trade union recognition and access rights from 30 October 2026.
Read MoreThe Access to the Countryside (Coastal Margin) (Kimmeridge Bay to Highcliffe) (No. 2) Order 2026
Set 2nd October 2026 as the commencement date for new public access rights on segments of the Dorset coast path.
Read MoreThe Town and Country Planning (General Permitted Development) (England) (Amendment) (No. 2) Order 2026
Expanded permitted development rights for electric vehicle chargers and electricity substations while extending temporary permissions for schools with RAAC-affected buildings.
Read MoreThe Batteries (Placing on the Market) (Northern Ireland) Regulations 2026
Established enforcement procedures and marking requirements for batteries in Northern Ireland to align with EU Regulation 2023/1542.
Read More