Decision on amending the methodology for setting the Contracts for Difference (CfD) cap allowance
This document set out our decision on amending the CfD allowance to better reflect cost and benefits faced by suppliers following our April 2022 consultation.
We have decided to remove the £0/MWh floor from the CfD price cap allowance by replacing the LCCC’s published ILR in our methodology with an expected levy payment, calculated using LCCC CfD payments forecasts and energy demand. We have also decided to not to introduce a reconciliation of the CfD allowance against outturn costs.
Update 5 July 2022: We have updated Annex 4 – policy cost allowance methodology v1.121 to correct an error in the formulae. This correction does not affect the calculations or values noted in the decision document. This update does not form a change to our decision.