Contracts for Difference (CfD)
The UK government’s main support scheme for new low-carbon generation — a two-way contract that tops up or claws back the difference between an agreed strike price and a market reference price.
Under the CfD scheme, a low-carbon generator agrees a strike price through a competitive allocation round. When the market reference price is below the strike, the generator receives a top-up payment; when it is above, the generator pays the difference back. Contracts run for 15 years and sit with the Low Carbon Contracts Company (LCCC), a government-owned counterparty.
The two-way design gives new projects long-term revenue stability while capping consumer cost when prices are high. Allocation rounds are run periodically, with capacity awarded by auction within technology pots.
A CfD stabilises the price a generator receives, but the generator still needs to sell its physical power — so CfD-backed assets still require a route to market, and frequently a PPA, alongside the support contract.
Structuring against this in a live deal?
ETC prices and executes PPAs across GB — founder-led, from indicative quote to signed contract.