The Competition and Markets Authority has dropped a prior recommendation for DECC to finalise proposals for Contracts for Difference budgets and the allocation of technologies to pots at least one year ahead of an auction.
In its energy market investigation final report, the CMA also canned proposals made in March’s provisional report for DECC to undertake a thorough assessment of the appropriate allocation of technologies and budgets to pots prior to each CfD auction.
Instead, the CMA said the department should “monitor the division of technologies between different pots and provide a clear justification when deciding on the allocation of budgets between the pots for each auction.”
The final report also recommended DECC carry out, and disclose the outcome of, a “clear and thorough impact assessment supporting a proposal to use its powers to allocate CfDs outside a competitive process.”
The investigation was critical of DECC’s “suboptimal” design of the non-auction CfD Investment Contracts awarded under the Final Investment Decision Enabling for Renewables process.
The CMA found the cost of the early CfDs was £250–£310m per year higher than had the projects been awarded contracts through a competitive auction.
The Energy and Climate Change Committee will hold a one-off hearing to examine the CMA’s proposals to reform the energy market on 5 July.
Image: DECC offices in Whitehall (Iesteph)
CMA drops CfD clarity ask
Energy market investigation cans demands for year-ahead auction budget allocation
By EBS