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<p>My officials have worked closely with developers and financial institutions in
working up the Offtaker of Last Resort (OLR) proposals in order to meet the needs
of independent renewable generators. The policy design is at an advanced stage, and
the detail of the proposals has been recently consulted on. We are on track to deliver
the final policy and introduce enabling regulations ahead of first allocation of Contracts
for Difference (CfD) applicants will have a high degree of clarity about the arrangements
for OLR, in advance of the first auctions.</p><p>The move to competitive allocation
of CfDs has been a long-standing feature of Electricity Market Reform. In early 2014,
Government consulted on proposals to move straight to competitive allocation for some
technologies, during which a number of independent renewable generators raised concerns
that they had less certainty of their costs than Vertically Integrated Utilities and
weretherefore faced with a higher financial risk that might undermine their ability
to win a CfD through a competitive process. In the Government's response, we set out
our expectation that the Power Purchase Agreement (PPA) market will evolve such that
PPAs could be signed on a conditional basis, providing greater cost certainty for
independent renewable generators.</p><p> </p>
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