The Contracts for Difference (Sustainable Industry Rewards and Contract Budget Notice Amendments) Regulations 2026

Published: Wed 15th Apr 26

These Regulations, enacted in April 2026, significantly amend the Contracts for Difference (CfD) legislative framework—specifically the Allocation, General, and Standard Terms Regulations 2014—to introduce new flexibilities concerning Sustainable Industry Rewards (SIR).

Key changes involve allowing the Secretary of State to define specific budget allocations (minima, maxima, and flexible pools) for SIR applications, changing the time limits for certain allocation processes, defining what constitutes met or unmet pre-award financial minimum standards, and establishing procedures for updating sustainable industry reward statements after contract notifications.

Arguments For

Streamlines the Contracts for Difference (CfD) scheme by introducing greater financial flexibility for sustainable industry rewards through specified minima, maxima, and flexible budgets.
Enhances the government's ability to strategically allocate support by allowing the Secretary of State to define which generators must or may apply for sustainable industry rewards before a specified date (31st December 2028).
Provides a mechanism for recognizing genuine, unavoidable barriers to compliance by allowing the Secretary of State to deem financial minimum standards met if failure is due to proven 'unforeseeable circumstances'.
Improves administrative clarity by updating definitions, clarifying the roles of the delivery body in notifying the Secretary of State about final notifications, and ensuring sustainable reward statements are updated following CFD notifications.

Arguments Against

Introduction of new complex budget structures ('minima', 'maxima', 'flexible minima') adds layers of complexity to the existing CfD allocation framework that may increase administrative burden or uncertainty.
Amendments related to 'financial minimum standards' and 'unforeseeable circumstances' might create discretionary loopholes, potentially leading to inconsistent application or rewarding underperformance without clear, objective triggers.
Tighter timelines mentioned for application windows and offer procedures (e.g., reducing review periods) could put pressure on applicants and government bodies to meet deadlines, risking rushed decision-making.
Ongoing amendments to core energy framework regulations suggest instability or evolving policy objectives within the CfD scheme, which can deter long-term private investment.

2026 No. 411

ELECTRICITY

The Contracts for Difference (Sustainable Industry Rewards and Contract Budget Notice Amendments) Regulations 2026

| - - - - Made | 14th April 2026 | |---|---| | - - Coming into force | 15th April 2026 |

This identifies the instrument as UK Statutory Instrument 2026 No. 411, titled 'The Contracts for Difference (Sustainable Industry Rewards and Contract Budget Notice Amendments) Regulations 2026.' It specifies that the Regulations were officially made on April 14th, 2026, and came into force the following day, April 15th, 2026.

The Secretary of State makes these Regulations in exercise of the powers conferred by sections 6(1) and (6), 12(1) and (3), 13(1) to (3) and (5) to (7), 14(2) and 19(1) of the Energy Act 2013( a ).

The Secretary of State made these Regulations using specific powers granted under sections 6, 12, 13, 14, and 19 of the Energy Act 2013.

This establishes the legal authority under which these amendments are being implemented.

The Secretary of State has consulted the persons listed in section 24(1) of that Act and has had regard to the matters in section 5(2) of that Act.

Before making the Regulations, the relevant Secretary of State completed mandatory consultation steps required by the Energy Act 2013, involving specified individuals under section 24(1) and considering relevant policy matters under section 5(2).

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.

In compliance with section 6(8)(b) of the empowering Act, a draft version of these Regulations was presented to and formally approved by both the House of Commons and the House of Lords before enactment.

PART 1 Introductory

Citation, commencement and extent

-(1) These Regulations may be cited as the Contracts for Difference (Sustainable Industry Rewards and Contract Budget Notice Amendments) Regulations 2026, and come into force on the day after the day on which they are made.

(2) An amendment made by these Regulations has the same extent as the provision amended.

Regulation 1 provides the formal details: the title for citation is set, and commencement occurs the day after being made.

Furthermore, the geographical or jurisdictional scope ('extent') of any provision that is modified carries over the extent of the original provision it amends.

PART 2 Amendment of the Contracts for Difference (Allocation) Regulations 2014

The Contracts for Difference (Allocation) Regulations 2014( b ) are amended in accordance with this Part.

Part 2 specifically modifies the Contracts for Difference (Allocation) Regulations 2014.

Regulation 2 officially states that the remainder of this Part contains the specific alterations being made to that foundational 2014 regulation.

Amendment to regulation 2 (interpretation)

In regulation 2(1)-

(a) in the appropriate places, insert-

''sustainable industry reward flexible minima' has the meaning given by regulation 13A(1A)(b)';

''sustainable industry reward maxima' has the meaning given by regulation 13A(1A)(c)';

''sustainable industry reward minima' has the meaning given by regulation 13A(1A)(a)';

(b) in the definition of 'sustainable industry reward', for 'in the seventh, eighth or ninth allocation round' substitute 'in an allocation round established by an allocation round notice given before 31st December 2028';
(c) in the definition of 'sustainable industry reward budget' omit 'expressed as a sum of money payable per gigawatt of electricity generated by such generators'.

Regulation 3 updates the definitions section of the Allocation Regulations.

It introduces three new defined financial terms related to sustainable industry rewards: 'maxima', 'minima', and 'flexible minima', referencing definitions in a new regulation 13A. It also broadens the scope of when a sustainable industry reward applies, changing the reference from specific rounds (seventh, eighth, ninth) to any round announced before the end of 2028.

Finally, it removes a specific monetary unit expression from the definition of 'sustainable industry reward budget'.

Amendment to regulation 4A (establishing application windows)

In regulation 4A(3)(b), for 'four' to the end, substitute 'the day after the day the sustainable industry reward allocation process concludes.'.

Regulation 4 alters the procedure for establishing application windows under regulation 4A. It changes the preceding fixed time period ('four' [weeks/months, inferred from context]) to depend directly on the conclusion of the sustainable industry reward allocation process.

Amendment to regulation 5A (varying application windows)

In regulation 5A(5), for 'four' to the end, substitute 'the date which is the day after the day the sustainable industry reward allocation process concludes.'.

Similar to the previous change, Regulation 5 amends regulation 5A concerning the variance of application windows.

It replaces a fixed time reference ('four') with a dynamic date tied to the conclusion of the sustainable industry reward allocation process.

Amendment to regulation 6 (allocation frameworks)

In regulation 6-

(a) in paragraph (1)-
(i) in sub-paragraph (c), for 'the seventh, eighth and ninth allocation rounds', substitute 'an allocation round established by an allocation round notice given before 31st December 2028';
(ii) in sub-paragraph (d), for the words 'the seventh' to the end, substitute 'an allocation round established by an allocation round notice given before 31st December 2028, apply that framework to more than one such allocation round';
(b) after paragraph (2A)(a), insert-
'(ab) the classes of eligible generators that will be required, or permitted, to make a sustainable industry reward application;';
(c) in paragraph (2A)(b)-
(i) for 'establishment or alteration of an offshore wind CFD unit', substitute 'sustainable industry reward applicant';
(ii) omit ', which must' to the end;
(d) in paragraph (2B), for 'The matters referred to in this paragraph are', substitute 'For the purposes of setting out how the determination mentioned in paragraph (2A)(b) is to be made, the Secretary of State must have regard to how the development and sustainability of supply chains is supported by';
(e) in paragraph (2B)(c), after 'workforce', insert ', implementing fair work practices'.

Regulation 6 updates the rules governing allocation frameworks under regulation 6.

It modifies references to specific allocation rounds to align with the future-facing date (before 31st December 2028).

It also expands the content required in the framework to explicitly detail permitted and required sustainable industry reward applicants and mandates consideration of how supply chain development and sustainability, including fair work practices, are supported when making determinations.

Amendment to regulation 7 (framework notices)

In regulation 7(4)(b), omit the words from ', which' to 'notice'.

Regulation 7 revises framework notices by removing a specific clause beginning with ', which' from regulation 7(4)(b), simplifying or removing a mandate previously attached to the framework notice content.

Amendment to regulation 8 (framework revisions)

In regulation 8-

(a) in paragraph (2B), for '30', substitute '10';
(b) in paragraph (5)(d), omit the words from ', which must not' to the end.

Regulation 8 amends framework revisions rules.

It reduces a time period specified in paragraph (2B) from 30 to 10 (likely days).

It also removes a restrictive clause ('which must not') from paragraph (5)(d), providing more latitude in revisions.

Amendment to regulation 13A (sustainable industry reward budgets)

In regulation 13A-

(a) after paragraph (1), insert-

'(1A) The Secretary of State may, in a sustainable industry reward budget notice, specify any of the following-

(a) budgets which are reserved for the sustainable industry reward applications described in the notice ('sustainable industry reward minima');
(b) budgets which must be prioritised for the sustainable industry reward applications described in the notice, and where those budgets are not exhausted, the remaining budgets may be used for the other sustainable industry reward applications ('sustainable industry reward flexible minima');
(c) maximum budgets which apply to the sustainable industry reward applications described in the notice ('sustainable industry reward maxima').

(1B) The sustainable industry reward allocation framework must set out-

(a) the time by which the sustainable industry reward budget notice must be published, which must be no later than the day before the day a notice under regulation 28C which includes a sustainable industry reward statement is given; and
(b) whether any draft forms of the sustainable industry reward budget notice must be published, and the time by which they must be published.

(1C) A draft form of the sustainable industry reward budget notice need not set out the Secretary of State's intentions as to the use of the description of budget mentioned in paragraph (1A).';

(b) omit paragraphs (2) to (6);
(c) in paragraph (7), omit 'its indicative, '.

Regulation 9 substantially rewrites regulation 13A to grant the Secretary of State new budgetary powers via a 'sustainable industry reward budget notice.' This inserts provisions for setting reserved minimum budgets, prioritized but potentially flexible budgets, and maximum budgets for different specified applications.

It also dictates that the allocation framework must define timing for publishing the budget notice (relative to a regulation 28C notice) and whether drafts must be published.

Finally, it removes previous subsections (2) through (6), simplifying the budget specification process and removing the term 'indicative' regarding budget settings.

Amendment to regulation 13B (publication)

In regulation 13B-

(a) omit paragraph (1)(c);
(b) in paragraph (2), for 'being given notice under regulation 35(1) (completion of the contract allocation process)', substitute 'the first CFD notification being given'.

Regulation 10 modifies publication rules under 13B by removing paragraph (1)(c) entirely.

It also updates the reference point for calculation in paragraph (2), changing it from the completion of the contract allocation process (under regulation 35(1)) to the date the first Contract for Difference (CFD) notification is officially given.

Amendment to regulation 26 (statements in relation to supply chains)

In regulation 26(3A), for the words from 'the application' to the end, substitute 'the applicant does not provide a copy of a sustainable industry reward statement that applies to the relevant CFD unit in respect of the allocation round.'.

Regulation 11 amends regulation 26(3A) concerning supply chain statements.

The previous condition for action is replaced, clarifying that a specific consequence arises if an applicant fails to provide a sustainable industry reward statement relevant to the CFD unit for that allocation round.

Amendment to regulation 27B (statements in relation to sustainable industry rewards)

For regulation 27B, substitute-

'Statements in relation to sustainable industry rewards

27B. If required by a contract allocation framework or a sustainable industry reward allocation framework, the applicant must provide a copy of a sustainable industry reward statement that applies to the relevant CFD unit in respect of the allocation round.'.

Regulation 12 entirely replaces regulation 27B. The new version mandates that an applicant must submit a copy of the applicable sustainable industry reward statement for the relevant CFD unit if either the contract or the specific sustainable industry reward allocation framework requires it.

Amendment to regulation 28A (sustainable industry reward application)

In regulation 28A-

(a) for paragraph (1), substitute-

'(1) An eligible generator may make a sustainable industry reward application to the Secretary of State if required or permitted by a sustainable industry reward allocation framework.';

(b) omit paragraph (2)(a);
(c) in paragraph (2)(b), for 'establishment or alteration of the offshore wind CFD unit', substitute 'sustainable industry reward application'.

Regulation 13 revises the rules for making a sustainable industry reward application under regulation 28A. Paragraph (1) clarifies that applications are only allowed if either required or permitted by the relevant allocation framework.

It removes provisions in paragraph (2)(a) and updates terminology in (2)(b) to refer to the 'sustainable industry reward application' instead of the specific asset type ('offshore wind CFD unit').

Amendment to regulation 28B (particulars of sustainable industry reward application)

In regulation 28B-

(a) for paragraph (1), substitute-

'(1) A sustainable industry reward application must comply with the requirements set out in the sustainable industry reward allocation framework in relation to that round.';

(b) in paragraph (2)(a), for 'the offshore wind CFD unit', substitute 'a generating station'.

Regulation 14 updates the requirements for the details an application must contain under regulation 28B. Paragraph (1) now states that the application must comply with the specific requirements set out in the relevant sustainable industry reward allocation framework for that round.

Paragraph (2)(a) changes the reference from a specific project type to the general term 'a generating station'.

Amendment to regulation 42 (timing and content of CFD notifications and notices)

In regulation 42, after paragraph (3), insert-

'(3A) The delivery body must, when it gives a CFD notification, inform-

(a) the relevant applicant; and
(b) the Secretary of State,

of the CFD unit to which the CFD notification relates.

(3B) The delivery body must inform the Secretary of State when it gives the final CFD notification for an allocation round.'.

Regulation 15 introduces new procedural steps in regulation 42 regarding CFD notifications.

The delivery body must now notify the relevant applicant and the Secretary of State of the specific CFD unit associated with any CFD notification it issues.

Additionally, it must inform the Secretary of State when the final CFD notification for an entire allocation round has been issued.

Insertion of regulation 42A

After regulation 42, insert-

'Updating the sustainable industry reward statement

42A. -(1) This regulation applies where an applicant has a sustainable industry reward statement that applies to two or more CFD units, one or more of which is the subject of a CFD notification.

(2) The Secretary of State must make any amendments to the sustainable industry reward statement that the Secretary of State considers are necessary to make clear how the statement applies in respect of each of the CFD units that is the subject of a CFD notification.

(3) The Secretary of State must take account of any representations made by the applicant by the end of the period of 5 working days beginning with the notification date.

(4) By the end of the period of 10 working days beginning with the notification date, the Secretary of State must give notice of any amendments made pursuant to paragraphs (2) and (3) to the applicant and the CFD counterparty.

(5) In this regulation, 'the notification date' means the date on which the Secretary of State receives notification from the delivery body that it has given its final CFD notification in relation to the allocation round.'.

Regulation 16 introduces a new regulation, 42A, detailing the process for updating a sustainable industry reward statement if it applies to multiple CFD units, and only some receive a CFD notification.

The Secretary of State must amend the statement to clarify its application to the notified unit(s) (2), considering applicant representations within five working days (3).

The Secretary of State then issues notice of any amendments to the applicant and CFD counterparty within ten working days following the date of receiving final notification (4).

PART 3 Amendment of the Electricity Market Reform (General) Regulations 2014

The Electricity Market Reform (General) Regulations 2014( a ) are amended in accordance with this Part.

Part 3 amends the Electricity Market Reform (General) Regulations 2014.

Regulation 17 states that the succeeding provisions in this Part detail the changes being made to that set of regulations.

Amendment to regulation 2 (interpretation)

In regulation 2, in the appropriate place, insert-

''financial minimum standards' means minimum standards of financial contribution to the development and sustainability of supply chains as set out in the sustainable industry reward allocation framework (within the meaning of regulation 2(1) of the Contracts for Difference (Allocation) Regulations 2014);'.

Regulation 18 inserts a new definition for 'financial minimum standards' into the General Regulations.

These standards relate to the financial contribution an applicant needs to make toward supply chain development and sustainability, as specified within the relevant sustainable industry reward allocation framework.

Amendment to regulation 12D (application for sustainable industry reward implementation statements)

In regulation 12D(2)(b), for the words ', fully' to the end, substitute 'met the financial minimum standards.'.

Regulation 19 amends the criteria for applying for a sustainable industry reward implementation statement under regulation 12D(2)(b).

It replaces previous specific requirements (implied by ', fully') with the definitive condition that the applicant must have 'met the financial minimum standards'.

Amendment to regulation 12E (particulars of sustainable industry reward implementation applications)

In regulation 12E(1)(b), at the end, insert ', or state the generator party applicant's intention to rely on regulation 12G.'.

Regulation 20 amends regulation 12E(1)(b), which covers the details required in an implementation application.

It adds an option allowing the generator party applicant to state an intention to rely on the provisions of the newly inserted regulation 12G, rather than providing certain details.

Amendment to regulation 12F (providing sustainable industry reward implementation statements)

In regulation 12F(1)(b), for the words 'minimum standards' to the end, substitute 'financial minimum standards.'.

Regulation 21 revises regulation 12F(1)(b) by ensuring that when providing an implementation statement, the reference in that sub-paragraph is now explicitly to the defined 'financial minimum standards'.

Insertion of regulation 12G

After regulation 12F, insert-

'Effect of unforeseeable circumstances

12G -(1) This regulation applies where -

(a) a generator party applicant has failed to meet the financial minimum standards; and
(b) the generator party applicant has, with its sustainable industry reward application, provided evidence that its failure to do so is to any extent attributable to unforeseeable circumstances.

(2) If the Secretary of State is satisfied that the failure mentioned in paragraph (1)(a) is to any extent attributable to unforeseeable circumstances, the Secretary of State may to that extent treat the financial minimum standards as met for the purposes of regulation 12D(2) or 12F(1).

(3) For the purposes of this regulation, 'unforeseeable circumstances' are circumstances that-

(a) were not reasonably foreseeable by the generator party applicant at the time the generator party applicant applied for its sustainable industry reward statement, or at the time it most recently applied for the statement to be amended by virtue of regulation 28E(1)(c) of the Contracts for Difference (Allocation) Regulations 2014; and
(b) are outside the generator party applicant's reasonable control.

(4) A failure is 'attributable' to unforeseeable circumstances if the generator party applicant took all reasonable steps to avoid the failure (including applying for its sustainable industry reward statement to be amended by virtue of regulation 28E(1)(c) of the Contracts for Difference (Allocation) Regulations 2014 where it would be reasonable to do so).'.

Regulation 22 inserts a new protective provision, 12G, allowing for relief concerning unmet financial minimum standards.

If an applicant provides evidence that failure was due to 'unforeseeable circumstances' (defined clearly in (3) as external events outside reasonable control and not foreseeable at the time of application/amendment), the Secretary of State can treat the standards as met for the purposes of regulations 12D(2) or 12F(1).

Paragraph (4) clarifies that a failure is only considered 'attributable' if the applicant took all reasonable avoidance steps.

PART 4 Amendment of the Contracts for Difference (Standard Terms) Regulations 2014

The Contracts for Difference (Standard Terms) Regulations 2014( a ) are amended in accordance with this Part.

Part 4 addresses changes to the Contracts for Difference (Standard Terms) Regulations 2014.

Regulation 23 confirms that the subsequent rules modify this specific set of regulations.

Amendment to regulation 2 (interpretation)

In regulation 2, in the appropriate place, insert-

''sustainable industry reward statement' has the meaning given by regulation 2(1) of the Contracts for Difference (Allocation) Regulations 2014;'.

Regulation 24 updates the interpretation section of the Standard Terms Regulations by formally introducing the definition of 'sustainable industry reward statement,' which is cross-referenced from the Allocation Regulations.

Amendment to regulation 3 (provision to be included in standard terms)

In regulation 3(1)(ja), omit '(within the meaning' to the end.

Regulation 25 simplifies the content required in the standard terms by removing the clause starting with '(within the meaning' from paragraph (1)(ja) of regulation 3.

Amendment to regulation 9 (preparation of a CFD)

In regulation 9(3)-

(a) omit the 'and' after sub-paragraph (a);
(b) after sub-paragraph (b), insert '; and
(c) where regulation 42A of the Contracts for Difference (Allocation) Regulations 2014 applies, the information contained in any amended sustainable industry reward statement.'.

Regulation 26 revises the preparation of a CFD under regulation 9(3).

It removes a conjunction to allow for insertion of a new sub-paragraph (c).

This new sub-paragraph ensures that if the rules for updating statements (Regulation 42A of the Allocation Regulations) apply, the information contained in the subsequently amended sustainable industry reward statement must be incorporated into the CFD preparation process.

Amendment to regulation 10 (offer to contract)

-(1) In regulation 10(2), for 'within 10 working days of receiving a CFD notification' substitute 'in relation to a CFD unit within 10 working days of the later of-

(a) the date the CFD counterparty receives a CFD notification in relation to that CFD unit; and
(b) the date that the Secretary of State gives notice to the CFD counterparty of amendments made to the sustainable industry reward statement in relation to that CFD unit under regulation 42A(4) of the Contracts for Difference (Allocation) Regulations 2014.';

(2) After regulation 10(5), insert-

'(6) In this regulation, 'CFD unit' has the meaning given by regulation 2(1) of the Contracts for Difference (Allocation) Regulations 2014.'.

Regulation 27 amends the timing for making an offer to contract.

Paragraph (1) extends the 10-working-day period calculation under regulation 10(2) to start from the later of either receiving the CFD notification or receiving notice of any amendments made to the sustainable industry reward statement under the new regulation 42A(4).

Paragraph (2) formally inserts a definition for 'CFD unit' within regulation 10.

14th April 2026

Michael Shanks Minister of State Department for Energy Security and Net Zero

This section confirms the signatory is Michael Shanks, the Minister of State for the Department for Energy Security and Net Zero, and confirms the date of enactment as April 14th, 2026.

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Contracts for Difference (Allocation) Regulations 2014 (S.I. 2014/2011) ('Allocation Regulations'), the Electricity Market Reform (General) Regulations 2014 (S.I. 2014/2013) ('EMR Regulations') and the Contracts for Difference (Standard Terms) Regulations (S.I. 2014/2012) ('Standard Terms Regulations'). Those Regulations form part of the legislative framework underpinning the Contracts for Difference ('CFD') scheme under section 6 of the Energy Act 2013 (c. 32).

Part 2 amends the Allocation Regulations. Regulations 4 and 6 to 8 reduce the time required to open the application window and permit a sustainable industry reward round to be opened by the Secretary of State before 31st December 2028. Regulation 9 allows the Secretary of State to set a sub-budget which can be flexible and include minima and maxima. Regulations 11 to 14 enable the Secretary of State to specify which technologies must, or are permitted to, apply for a sustainable industry reward statement, and the requirements an applicant must meet. Regulation 15 makes provision for the delivery body to issue CfD notices to those specified and to inform the Secretary of State when it gives the final CfD notification for an allocation round. Regulation 16 requires the Secretary of State to update a sustainable industry reward statement which applies to two or more CfD units, one or more of which is the subject of a CfD notification.

Part 3 amends the EMR Regulations. Regulations 18 and 19 provide that a sustainable industry reward implementation statement cannot be awarded by the Secretary of State unless the financial minimum standards have been met. Regulation 22 provides that the Secretary of State may deem an applicant has fulfilled the financial minimum standards where they have been unable to fulfil those financial minimum standards due to unforeseeable events or circumstances.

Part 4 amends the Standard Terms Regulations. Regulation 24 inserts a definition of 'sustainable industry reward statement'. Regulation 26 requires the CFD counterparty to apply or complete the standard terms in accordance with any updated sustainable industry reward statement. Regulation 27 requires the CFD counterparty to make an offer of a CFD within the time frame specified.

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 wwwGLYPH<c=0,font=/GFEDCB+TimesNewRomanPSMT> .legislation.gov.uk.

The Explanatory Note confirms that this instrument amends the three key 2014 regulations underpinning the CfD scheme.

Part 2 focuses on speeding up the sustainable industry reward process, introducing flexible budgeting, and clarifying requirements for statements and notifications.

Part 3 clarifies that financial minimum standards must be met for implementation statements but allows relief for unforeseeable circumstances.

Part 4 ensures standard terms are updated to reflect changes to sustainable reward statements and maintains required offer timing for CFDs.

It also directs readers to where the related impact assessment can be found.

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