The Contracts for Difference (Miscellaneous Amendments) (No. 3) Regulations 2025 amend the 2014 Contracts for Difference (Allocation) and (Electricity Supplier Obligations) Regulations.
Key changes include introducing price, pot, and estimated budget notices for greater transparency; expanding auditing requirements to include estimated budgets; revising contract budget notice and revision timing; and amending allocation reporting to allow for anonymized bid data.
The changes aim to enhance efficiency, transparency, and accountability within the contracts-for-difference scheme for low-carbon electricity generation.
Arguments For
Improved Transparency and Efficiency: The amendments introduce new notice requirements for price, pot, and estimated budgets, enhancing transparency in the allocation process and improving efficiency in resource management.
Enhanced Regulatory Oversight: Expanded auditing provisions provide further scrutiny of the allocation processes, promoting accountability and reducing potential for discrepancies.
Streamlined Processes: The amendments aim to streamline various aspects of the allocation and reporting processes, potentially leading to cost savings and quicker turnaround times.
Legal Basis: The changes are made pursuant to the Energy Act 2013, providing a clear legal basis for regulatory updates and ensuring regulatory consistency.
Incentivizing Renewable Energy: By addressing processes in the Contracts for Difference scheme, these regulations continue to support the government’s targets for low carbon electricity generation.
Arguments Against
Increased Administrative Burden: The introduction of new notice requirements and expanded auditing procedures could lead to increased administrative burdens for both the delivery body and government.
Implementation Challenges: Coordinating the implementation of these changes and ensuring seamless integration with existing processes could pose significant technical and logistical challenges.
Unintended Consequences: Unforeseen consequences may arise from changing established processes, potentially delaying contracts or causing additional costs.
Potential for Delays: The numerous amendments and their complex nature might lead to delays in the allocation process, affecting the deployment of renewable energy capacity.
Cost implications: The costs associated with the additional administration, auditing, and implementation of the regulations may outweigh benefits if not carefully managed.
The Secretary of State makes these Regulations in exercise of the powers conferred by sections 6(1) and (6), 9, 12, 13, and 19 of the Energy Act 20131.The Secretary of State has consulted the persons listed in section 24(1), and had regard to the matters listed in section 5(2), of that Act.In accordance with section 6(8)(b) of that Act, a draft of this instrument was laid before, and approved by a resolution of, each House of Parliament.
The Secretary of State created these regulations under the authority granted by sections 6(1), 6(6), 9, 12, 13, and 19 of the Energy Act 2013.
The Secretary of State consulted with relevant parties and considered factors outlined in sections 24(1) and 5(2) of the Energy Act 2013.
A draft of the regulations was submitted to and approved by both houses of Parliament, as required by section 6(8)(b).
Part 1 Introductory
- Citation, commencement and extent (1) These Regulations may be cited as the Contracts for Difference (Miscellaneous Amendments) (No. 3) Regulations 2025. (2) These Regulations come into force on the day after the day on which they are made. (3) An amendment made by these Regulation has the same extent as the provision it amends.
This introductory part provides the official title of these regulations as the Contracts for Difference (Miscellaneous Amendments) (No. 3) Regulations 2025.
It states they take effect the day after their creation.
Finally, it notes that any changes made by these regulations apply to the same scope as the original rules they modify.
Part 2 Amendment of the Contracts for Difference (Allocation) Regulations 2014 Chapter 1 Introduction 2. Amendment of the Contracts for Difference (Allocation) Regulations 2014 The Contracts for Difference (Allocation) Regulations 20142 are amended in accordance with this Part.
Part 2 details amendments to the 2014 Contracts for Difference (Allocation) Regulations.
Chapter 1 introduces the amendments to the 2014 regulations which are described in the following chapters.
Chapter 2 Budgets applicable to allocation rounds 3. Amendment to regulation 2 (interpretation) In regulation 2(1), in the appropriate places, insert— ““estimated budget” means the total— (a) estimated sum of money potentially payable by the CFD counterparty under CFDs to eligible generators in a delivery year, excluding sustainable industry rewards; (b) estimated capacity of electricity which may be generated by generating stations subject to a CFD in a delivery year; or (c) a combination of (a) and (b);”; “estimated budget notice” means a notice required by regulation 10B(2);”; “pot notice” means a notice referred to in regulation 10A(3);”; “price notice” means a notice required by regulation 10A(1);”; “sustainable industry reward budget notice” means a notice required by regulation 13A(1);”.
This section amends the definition of terms within Regulation 2 of the 2014 regulations to include definitions for "estimated budget," "estimated budget notice," "pot notice," "price notice," and "sustainable industry reward budget notice." These newly added definitions clarify the meaning of key concepts related to budget estimations and notices within the allocation process.
- Amendment to regulation 10 (application) In regulation 10, omit paragraph (2).
This part removes paragraph (2) from Regulation 10 of the 2014 regulations.
The specific content of this omitted paragraph is not detailed here.
- Insertion of regulations 10A and 10B After regulation 10, insert— “Price and pot notices 10A. (1) The Secretary of State must by notice (“a price notice”) specify the administrative strike prices applicable to applications in an allocation round. (2) Where the administrative strike prices in the price notice are stated by reference to a price which is not current at the date of that notice, the price notice must include a factor which, when applied to the administrative strike prices, converts the administrative strike prices into administrative strike prices current at that date. (3) The Secretary of State may by notice (“a pot notice”) specify descriptions of applications for the purpose of regulation 11(2)(c) (contract budget notices: pot). (4) The Secretary of State may revise a pot notice where that revision has effect more than 10 working days before the application opening date. (5) A price notice, pot notice and a revision to a pot notice must—(a) be given to the delivery body,(b) identify the allocation round to which the notice applies, and(c) be given no later than 10 working days before the application opening date. Estimated budget notices 10B. (1) This regulation applies where the Secretary of State makes a direction under regulation 54 (allocation reports) to the delivery body to make available details of the matters specified in regulation 54(2)(e) but the delivery body cannot provide the details without an estimated budget notice. (2) The Secretary of State must by notice (“an estimated budget notice”) specify as many of the following as the delivery body needs to make available the details referred to in paragraph (1)—(a) an estimated budget which is available for each delivery year applicable to an allocation round either for—(i) the whole allocation round, or(ii) a description of applications specified in any pot notice in respect of the allocation round;(b) budgets which are reserved for descriptions of applications specified in the estimated budget notice (“estimated minima”);(c) maximum budgets which apply to descriptions of applications specified in the estimated budget notice (“estimated maxima”). (3) Where estimated maxima or estimated minima are specified, they may be expressed as—(a) a sum of money;(b) an amount of capacity of electricity generation; or(c) a combination of (a) and (b). (4) Where any budget referred to in paragraph (2) is expressed as an amount of capacity of electricity generation, the Secretary of State may specify in the estimated budget notice that a soft constraint3 applies to that amount, and in such a case, the amount of capacity of electricity generation may be exceeded, but only in accordance with the provisions of the contract allocation framework that applies to that allocation round. (5) The estimated budget notice must—(a) be given to the delivery body as soon as practicable; and(b) identify the allocation round to which it applies.”.
Regulations 10A and 10B are inserted into the 2014 regulations.
Regulation 10A mandates that the Secretary of State issue price and pot notices related to administrative strike prices and application descriptions, and establishes deadlines for these notices.
Regulation 10B necessitates the issuance of estimated budget notices when information is needed but unavailable without this notice. This includes specifying estimated budgets, reserved budgets (minima), and maximum budgets (maxima), which can be expressed in monetary or capacity terms.
The regulation also introduces the concept of 'soft constraints' allowing budget overruns only under specified conditions.
- Amendment to regulation 11 (contract budget notices) In regulation 11—(a) omit “and” after paragraph (1)(a);(b) omit paragraph (1)(b);(c) in paragraph (2)(c), for “notice” substitute “pot notice”;(d) in paragraph (4A), for “that a “soft constraint” applies” substitute “that a soft constraint applies”;(e) for paragraph (5)(a) substitute—“(a) be given to the delivery body at such time as is set out in the contract allocation framework; and”;(f) omit paragraph (5)(c) and the “and” before it.
This section modifies Regulation 11, removing the word "and" after paragraph (1)(a), deleting paragraph (1)(b), replacing "notice" with "pot notice" in paragraph (2)(c), correcting the quotation marks around "soft constraint" in paragraph (4A), replacing paragraph (5)(a) to specify timing as defined by the contract allocation framework, and deleting paragraph (5)(c) and the preceding "and" in Regulation 11 of the 2014 regulations.
- Amendment to regulation 12 (contract budget revision) In regulation 12—(a) for paragraph (2) substitute—“(2) The Secretary of State—(a) may revise a contract budget notice (“a contract budget revision”)—(i) in the period after the contract budget notice has been given but before the first CFD notification4, further to the allocation round to which the contract budget notice applies, has been given; and(ii) in accordance with paragraph (5); but(b) must only effect a contract budget revision by a notice (“a contract budget revision notice”) which complies with regulation 13.”;(b) omit paragraphs (3) and (4);(c) in paragraph (5) omit “Where this paragraph applies,”.
Regulation 12 is amended by replacing paragraph (2) to clarify the conditions under which contract budget revisions can be made and specifying that any revision must adhere to regulation 13.
Additionally, paragraphs (3) and (4) are removed from the regulation and the phrase "Where this paragraph applies," is removed from paragraph (5).
- Insertion of regulation 13B (publication) After regulation 13A insert— “Publication 13B. (1) As soon as practicable after they are given to the delivery body, the Secretary of State must make the following publicly available—(a) the price notice;(b) the pot notice and a revision to that notice where it is revised;(c) the sustainable industry reward budget notice in its indicative, draft and final form. (2) Before, or no later than is reasonably practicable after, being given notice under regulation 35(1) (completion of the contract allocation process), the Secretary of State must make publicly available—(a) the contract budget notice; and(b) the contract budget revision notice, where such notice is given.”.
A new Regulation 13B is added, mandating public release of price, pot, and sustainable industry reward budget notices (in all stages) promptly after they're given to the delivery body.
Contract budget notices and any revisions must be publicly available before or soon after the contract allocation process is complete, ensuring accountability and transparency.
Chapter 3 Auditing 9. Amendment to regulation 36 (auditing) In regulation 36—(a) for paragraph (1) substitute—“(1) The delivery body must obtain an audit of the calculations—(a) likely to be made by it in the contract allocation process in relation to an estimated budget as soon as reasonably practicable after an estimated budget notice has been given to the delivery body; and(b) made by it in the contract allocation process as soon as reasonably practicable after a notice is given under regulation 35(1) (completion of the contract allocation process).”;(b) in paragraph (2), for “A process audit” substitute “An audit under paragraph (1)”.
Regulation 36 is changed.
Paragraph (1) is replaced to require the delivery body to obtain audits of calculations related to estimated budgets and those performed during the entire contract allocation process.
Additionally, the phrase "A process audit" in paragraph (2) is changed to "An audit under paragraph (1)." This amendment extends the auditing requirements to cover calculations involving the estimated budget which enhances transparency.
- Amendment to regulation 37 (provision of audit report to the Secretary of State) In regulation 37(1)(b), for “having regard to the report” substitute “only where a report is obtained under regulation 36(1)(b), having regard to that report”.
This amendment to Regulation 37 clarifies that consideration of the audit report is only necessary if a report is obtained under the new requirements of Regulation 36(1)(b).
Chapter 4 Allocation Reports 11. Amendment to regulation 54 (allocation reports) In regulation 54, for paragraph (3), substitute—“(3) The Secretary of State may only direct the delivery body to provide information in respect of bids of strike prices in an anonymised form.”.
Regulation 54 is changed to allow the Secretary of State to only request anonymized bid information on strike prices from the delivery body.
This change promotes fairness and protects confidential business information.
Part 3 Amendment of the Contracts for Difference (Electricity Supplier Obligations) Regulations 2014 12. Amendment of the Contracts for Difference (Electricity Supplier Obligations) Regulations 2014 The Contracts for Difference (Electricity Supplier Obligations) Regulations 20145 are amended in accordance with this Part.
Part 3 outlines amendments to the Contracts for Difference (Electricity Supplier Obligations) Regulations of 2014.
The specific amendments are detailed in the following sections.
- Amendment to regulation 2 (interpretation) In regulation 2(1), in the appropriate place, insert— ““sustainable industry reward” has the meaning given in regulation 2(1) of the Contracts for Difference (Allocation) Regulations 2014 as amended from time to time;”.
This section adds a definition for "sustainable industry reward" to Regulation 2(1) of the 2014 regulations, drawing the definition from the amended Regulation 2(1) of the Contracts for Difference (Allocation) Regulations 2014.
- Amendment to regulation 4 (CFD daily contributions) In regulation 4—(a) in paragraph (1), in both the definition of “GP” and “CP”, after sub-paragraph (f), insert—“(g) the sustainable industry reward which arose on that day;”;(b) in paragraph (2)—(i) in the definition of “generation counterparty payment”, after sub-paragraph (f) insert—“(g) the sustainable industry reward;”;(ii) in the definition of “generation party payment”, after sub-paragraph (f) insert—“(g) the sustainable industry reward.”.
This section adds the factor "sustainable industry reward" to the calculations in Regulation 4, specifically to definitions of GP, CP, generation counterparty payment, and generation party payment, ensuring its inclusion in daily CFD contribution calculations.
- Amendment to regulation 7 (estimated cost, income & electricity supply) In regulation 7, in paragraph (5), in both the definition of “TCPR” and “TGPR”, after sub-paragraph (f), insert—“(g) the sustainable industry reward;”.
This amendment to Regulation 7 adds "sustainable industry reward" to the calculations in paragraph (5), specifically to the definitions of TCPR and TGPR. This similarly integrates the reward into estimated cost, income, and electricity supply calculations.
Explanatory Note (This note is not part of the Regulations) These Regulations are made under Chapter 2 of Part 2 of the Energy Act 2013 (c. 32) (“the Act”), which enables the Secretary of State to make regulations about “contracts for difference” (defined in section 6(2) of the Act), for the purpose of encouraging low carbon electricity generation. Contracts for difference (“CFDs”) are between a “CFD counterparty” which is a person designated under section 7 of the Act and an “eligible generator” (defined in the Contracts for Difference (Definition of Eligible Generator) Regulations 2014 (S.I. 2014/2010)). They award subsidies accessed through a private law contract normally secured in an allocation round. Part 2 amends the Contracts for Difference (Allocation) Regulations 2014 (S.I. 2014/2011) as follows: Chapter 2: introduces price, pot and estimated budget notices; defers the timing of the contract budget notice to the allocation framework and revises the timing of the contract budget revision notice. Chapter 3 expands the auditing provisions to the estimated budget. Chapter 4 amends regulation 54 (allocation reports) so a delivery body may now be directed to provide the Secretary of State with: (a) the bids of strike prices; and (b) information about those bids before the first “CFD notification” (defined in section 12(1) of the Act, as a notification containing certain information for the purpose of making an offer to contract with an eligible generator). Part 3 amends the Contracts for Difference (Electricity Supplier Obligations) Regulations 2014 (S.I. 2014/2014). It incorporates the Sustainable Industry Reward (also known as the Clean Industry Bonus) into the calculation for: (a) the interim levy rate; and (b) the “CFD period contribution”, payable to the CFD counterparty by an “electricity supplier” in respect of a day in the “quarterly obligation period” (all defined in regulation 2(1) of S.I. 2014/2014). A full impact assessment of the effect that this instrument will have on the costs of the business, voluntary and public sector is available from the Department for Energy, Security and Net Zero, 3-8 Whitehall Place, London, SW1A 2HH, and is available alongside this instrument on www.legislation.gov.uk.
The explanatory note summarizes the regulations.
It explains that the regulations are enacted under the Energy Act 2013 to support low-carbon electricity generation via contracts for difference (CFDs).
The note details amendments in Part 2 to the 2014 allocation regulations, including the introduction of new notice requirements and revised auditing procedures.
Part 3's amendments to the 2014 electricity supplier regulations integrate the Sustainable Industry Reward into relevant calculations.
Finally, it notes that the full impact assessment is publicly available.