The Contracts for Difference (Miscellaneous Amendments) Regulations 2025
On January 13, 2025, the UK government published The Contracts for Difference (Miscellaneous Amendments) Regulations 2025 (the “Regulations”). The Regulations amend the Contracts for Difference (Allocation of Renewables Obligation Certificates) Regulations 2014 (the “2014 Regulations”) in order to reflect the end of the Renewables Obligation scheme in 2027.
The Renewables Obligation scheme was introduced in 2002 with the aim of encouraging the generation of renewable electricity in the UK. The scheme required electricity suppliers to source a certain percentage of their electricity from renewable sources. In return, electricity suppliers were issued with Renewables Obligation Certificates (ROCs), which could be traded on the market.
The Contracts for Difference scheme was introduced in 2014 as a replacement for the Renewables Obligation scheme. The Contracts for Difference scheme provides generators of renewable electricity with a fixed price for their electricity over a period of time. This provides generators with greater certainty and reduces the risk of investment in renewable energy projects.
The Regulations amend the 2014 Regulations in order to reflect the end of the Renewables Obligation scheme in 2027. The Regulations remove the requirement for electricity suppliers to source a certain percentage of their electricity from renewable sources. The Regulations also remove the requirement for electricity suppliers to be issued with ROCs.
The Regulations are expected to come into force on April 1, 2027.
Impact of the Regulations
The Regulations are expected to have a significant impact on the UK renewable energy market. The end of the Renewables Obligation scheme is likely to lead to a decrease in the amount of renewable electricity generated in the UK. This could lead to an increase in the cost of electricity for consumers.
The Regulations are also expected to have a significant impact on the Contracts for Difference scheme. The removal of the requirement for electricity suppliers to source a certain percentage of their electricity from renewable sources means that the Contracts for Difference scheme will no longer be a driver for the development of renewable energy projects. This could lead to a decrease in the amount of investment in renewable energy projects in the UK.
Conclusion
The Regulations are a significant change to the UK renewable energy market. The end of the Renewables Obligation scheme and the removal of the requirement for electricity suppliers to source a certain percentage of their electricity from renewable sources are likely to have a significant impact on the development of renewable energy in the UK.
The Contracts for Difference (Miscellaneous Amendments) Regulations 2025
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