contracts for difference implementation coordination
TRANSCRIPT
Contracts For Difference
Implementation Coordination
2
3
Agenda 21st July 2014
09:30 - 10:00 Introduction & Measures of Success
10:00 - 10:25 CfD Allocation Process Overview
10:25 – 11:10 Systems Overview
11:10 – 11:25 Coffee
11:25 – 12:00 User Registration
12:00 – 12:50 Application, Qualification & Disputes
12:50 – 13:30 Lunch
13:30 – 13:50 CfD Valuation
13:50 – 15:00 Allocation, Audit and CfD Notification
15:00 – 15:20 Coffee
15:20 – 16:00 Implementation Next Steps & Q&A
Implementation Coordination Aims
4
Enable readiness to participate in the CfD
Engage with delivery partners
Agree measures of success
Develop and maintain implementation issues log
Communicate policy related issues to DECC
The Team
5
John Perkins (CfD Manager)
Paul Mullen
Yasharn Smith
Nisar Ahmed
Giampaolo Panizio
Ian Woolley (EMR I.S. Manager)
James Greenhalgh (EMR Stakeholder Manager)
Engagement
6
Why?
Understand what implementation planning you need to do to be ready to participate.
Develop internal capabilities and processes to ensure readiness
How?
Engage in the process to ensure successful delivery
Today and future I.C events
August (with LCCC)
Sept (with LCCC)
Oct (With LCCC)
Bilateral meetings
Measures of Success
7
CfD Implementation Success
What does successful implementation look like?
I.T. systems available in time
maximum participation in allocation
Positive allocation outcome
Measures of Success
8
On Your tables please discuss the subject:
What does successful CfD Implementation look like?
Appoint a scribe and someone to feedback to the room
10 mins group discussion
10 mins feedback
Delivery Partners
Setting Legislation & Energy Policy
Signing and ongoing management of CfD contracts
Regulates Market (inc EMR)
Delivery Body
EMR Settlement Agent
Jun Jul Aug Sep Oct2014
Secondary Legislation and license changes come into force
Submit supply chain plans
Initial CfD Budget Published
Final Supply Chain Guidance
AF Publication & Regs laid
Contracts Minor & Necessary change request
DB Publish Round Guideline
Latest date for Budget Notice, Allocation Round Notice and Framework Notice
Application Round Start
Timeline leading up to first Allocation Round
CfD OverviewCfD Overview
CfD Legislative Update
Energy Act 2013
CfD (Definition of Eligible Generator)
Regulations
CfD (Allocation)
Regulations
Allocation Framework
Budget Notice
Allocation Round Notice
Framework Notice
CfD(Electricity Supplier
Obligations) Regulations
CfD (Standard Terms)
Regulations
EMR(General) Regulations
SOS Direction Regulations
(not currently laid)
Offtaker of
Last Resort Regulations
(not currently laid)
EU State Aid Approval
Key Round Documents (1)
• Allocation Process• Valuation Methodology
Allocation Framework
• Start and End Dates• Application Closing Date• Delivery Year(s)• Any Technology Restrictions
Allocation Round Notice
Key Round Documents (2)
• Links an Allocation Framework to an Allocation Round
Framework Notice
• Overall Budget• Administrative Strike Prices• May set Minima, Maxima
and Pot (Sub) budgets
Budget Notice
CfD Process – End to End
15
5. Appeal 6. Valuation
7. Sealed Bids
8. Allocation & Independent
Audit
9. Allocation Notification
1. Pre-Application Activities
2. Application 3. Qualification
4. Review
16
Application Qualification Review Appeal Valuation Sealed BidsAllocation & Independent
Audit
CFD Notification
17
Application Qualification Review Appeal Valuation Sealed BidsAllocation & Independent
Audit
CFD Notification
18
>=300MW submit Supply Chain Plan
Minor & necessary change requests
Allocation Framework, Allocation Round Notice & Budget Notices
Applicants
Ro
un
d O
pen
s
Minor & necessary change process
Supply Chain Plan Assessment
Training, Production of User Guides and Round Guidelines
Registration Requests
Process Registration
Requests
5.
Appeal6. Valuation 7. Sealed
Bids
8. Allocation &
Independent Audit
9. Allocation Notification
1. Pre-Application Activities
2. Application 3. Qualification 4. Review
19
ApplicantsApply
Assess Eligibility
Request Review
Review
Request Appeal
Appeal
Round Variation / Budget Revision Notices
Qualified Applicants
RO Check
5.
Appeal6. Valuation 7. Sealed
Bids
8. Allocation &
Independent Audit
9. Allocation Notification
1. Pre-Application Activities
2. Application 3. Qualification 4. Review
20
Applicants
Round Variation / Budget Revision Notices
Submit Sealed bids if requested
Value qualified applicants
Allocation & Independent Audit
Request sealed bids if required
5.
Appeal6. Valuation 7. Sealed
Bids
8. Allocation &
Independent Audit
9. Allocation Notification
1. Pre-Application Activities
2. Application 3. Qualification 4. Review
21
Applicants
Allocation Reports Review
Ro
un
d C
lose
s
CfD Notification
Issue Contracts
Contract Signature
5.
Appeal6. Valuation 7. Sealed
Bids
8. Allocation &
Independent Audit
9. Allocation Notification
1. Pre-Application Activities
2. Application 3. Qualification 4. Review
CfD Process – End to End
22
5. Appeal 6. Valuation
7. Sealed Bids
8. Allocation & Independent
Audit
9. Allocation Notification
1. Pre-Application Activities
2. Application 3. Qualification
4. Review
Systems
24
Comms Channels
Administration System
Eligibility
Reporting Registry
CfD Contracts
CMU Obligations
Eligibility Documentation
Energy Industry & Trade Associations
DECCOfgemExisting Generators
Prospective Generators
DSR Aggregators
Northern Ireland Parties (SONI)
External Parties
Auction Service
Companies & Users
User AuthenticationAuthentication
Service
Public
PrivateParticipants (market)Porta
l
Web
Alerts & Notifications
Secure Email
CfD AdminCRM CM AdminPre-
Qualification
FAQ & Guidance
Appeal Mgmt
Allocation
Comms & Queries
ObligationTracking
Round Reporting
Auction System
Counterparty &Settlement Agent
Microsoft Dynamics CRM plus
SharePoint PortalDelivered by Wipro
Power Auctions solution
Delivered by IBM
High Level Architecture Reminder
Security
Policies Solutions are designed to comply with National Grid Security Standards and Codes of
Practice which are all Government and CPNI approved
Data Centres All data centres used are ISO 27001/2 standards and SSAE16 Type II certified
Personnel All National Grid, Wipro and IBM personnel are bound by our security standards and
associated background checking
Channels All National Grid/Participant/Delivery Partner exchanges will be via https secure
Internet channels or secure email Intra-Data Centre communications are via secure VPN
Intrusion Protection Anti Virus and Malware protection on all servers, Network Security Zones, Edge
Network Security, Deep Packet Inspection, Core Firewall Multi Layer Switches Authentication
User name, password and PIN number required, Maintained via segregated ADFS PIN authentication through SMS Password 8 digits, at least 1 upper case, 1 lower case and 1 number or special
character, changed every 90 days25
System Requirements
The minimum system requirements for Participant system access
26
Description Portal
Downloads No executable downloaded code or cookies
Supported Browsers • IE 11, 10, 9, 8• Google Chrome (latest version) • Mozilla Firefox (latest version plus immediate
previous version) • Apple Safari (latest released version)
Operating Systems Microsoft Win7/8
Internet Connection Full Internet connectionBack-up internet connection recommended
Microsoft Office Microsoft Office 2010 or higher recommended
* XP is not recommended for security reasons but we will check that screens display correctly in XP. However, if you do choose to use XP, at your own risk, please use Chrome (not IE8) in order to have TLS 1.1
Support Process
27
Support Process: Admin & Auction Systems
IS S
ervi
c e
Pr o
vide
rIS
Hel
p D
esk
DB
CM
/ C
fD T
eam
Pa
r tic
i pan
t &
3rd
Par
ti es
Issue / QueryCall Delivery
Body Help Desk
Resolve Business
Issue / Query
Business or Technical Issue?
Log CallPass Call to
Service Provider
Receive Create /
Update Log
Resolve Issue Inform DB and
Update Heldesk
Update User and Update
Call Log
Confirm Resolution?Start
Technical
Yes
Update Log and Close
Call
End
Call log Closed
Contact IS Help Desk
Log Call Details
Business IssueNot
Resolved
End
Inform Provider Issue Not Resolved
Technical IssueNot
Resolved
Business
Service Characteristics
28
Description Portal
System Available for use 24*7
System Supported Period 8am – 6 pm
Contact Us Telephone Support 8am – 6 pm
System Availability (in supported period) 99.9%
Recovery Time 4 Hours
“Hot” Disaster Recovery Yes (Refresh)
Testing
Our system will undergo extensive testing to include; System Testing
All development will be tested before being submitted for UAT
User Acceptance Testing Full role base testing will undertaken prior to deployment and go-live
Performance Testing System performance will be tested through use of load simulation tools
Regression/Integration Testing All code will be tested to ensure integration and end-to-end function
Penetration Testing Full penetration testing will be undertaken by our accredited testing
agent, Portcullis
29
Training
System Specific Training will be offered close to launch of the system
Training is not mandatory but encouraged
Registration and Qualification:
User manuals
Training will be modular Webinar style hosted events
Webinar recordings available on-line
A dedicated EMR Helpline will be available to contact the Delivery Body
30
Contracts For Difference
Coffee Break
CfD Process – End to End
32
5. Appeal 6. Valuation
7. Sealed Bids
8. Allocation & Independent
Audit
9. Allocation Notification
1. Pre-Application Activities
2. Application 3. Qualification
4. Review
33
Comms Channels
Administration System
Eligibility
Reporting Registry
CfD Contracts
CMU Obligations
Eligibility Documentation
Energy Industry & Trade Associations
DECCOfgemExisting Generators
Prospective Generators
DSR Aggregators
Northern Ireland Parties (SONI)
External Parties
Auction Service
Companies & Users
User AuthenticationAuthentication
Service
Public
PrivateParticipants (market)Porta
l
Web
Alerts & Notifications
Secure Email
CfD AdminCRM CM AdminPre-
Qualification
FAQ & Guidance
Appeal Mgmt
Allocation
Comms & Queries
ObligationTracking
Round Reporting
Auction System
Counterparty &Settlement Agent
Microsoft Dynamics CRM plus
SharePoint PortalDelivered by Wipro
Power Auctions solution
Delivered by IBM
High Level Architecture Reminder
Portal – Look & Feel
34
Contracts for Difference
35
Registering for CfD Qualification
Ensures individual acting on behalf of an organisation is known, and authorised to do so
High Level Principles
All CfD Qualification Applications will be made through the National Grid “EMR Portal”
All Companies that wish to participate for Contracts for Difference will need to register within this system
Initial company registration through which company details will be cross-checked by National Grid
Thereafter other “company users” of the Portal may be added by the main company administrator user(s)
36
Registering Options
Companies will have three options for initial registration
If you are already registered for the Capacity Mechanism AND you want the same Main Admin for CM and CfD
Your existing registration can be extended to cover CfD
Once the system is live you can register via the system
The process will take two days to enable validation checks
You can register off-line in advance of system go-live via the bulk upload process
You will be able to use the system from go-live day
37
Registering Data Requirements
Field Name MandatoryCompany Name Y
Company Registration type
Y
Address 1 YAddress 2 NAddress 3 NCity YPost Code YCountry Y
Company Details
Company Registration No. VAT Registration Number
N
N
Field Name MandatoryFirst Name YLast Name YLandline No. N
Email Y
Role/Position of the authorised person
Y
Address 1 YAddress 2 NAddress 3 NCity YPost Code Y
Country Y
Role of the Authorised Person
Y
Authorised Person DetailsField Name MandatoryFirst Name YLast Name Y
Landline No. N
Mobile No.(Mandatory for SMS messaging)Email YAddress 1 YAddress 2 NAddress 3 NCity YPost Code YCountry Y
Main Administrator Details
Y
Registration Form – Via the System
38
User & Sub-company Registration
Company Administrator
CFD Users CM Users Sub Company Administrator
CFD Users CM Users
Company XYZ
• The Company Administrator for each company will be set up by National Grid on receipt of an authorised request. Including password/PIN re-sets
• The Company (or Sub-Company) Administrator will typically be a manager within the participant EMR organisation
• The Company Administrator (or Sub Company Admin) can then assign and manage other users within the company
• User Password/PIN resets are managed by the Company Administrator
Bulk Upload
• We will provide a bulk upload facility to enable early preparation of Registration and Application data
• Based upon offline .csv files exchanged via email. National Grid will upload data for validation by participants
• We will provide templates for;
1. Company and Main Administrator Registration
2. User and Sub-company Registration & Privileges
3. Qualification Data
4. CMU Data
• We would like all participants to use Template 1 (above) for Company and Main Administrator Registration
• We expect that use of templates 2 – 4 (above) will only be of value for those with multiple applications/CMUs
• Documents and files to be submitted must be uploaded manually
CfD Process – End to End
41
5. Appeal 6. Valuation
7. Sealed Bids
8. Allocation & Independent
Audit
9. Allocation Notification
1. Pre-Application Activities
2. Application 3. Qualification
4. Review
CfD Qualification
42
To be a qualifying applicant
Meet Eligibility Requirements
(General, additional & supplemental)
Provision of other
information/data
Not be an Excluded Applicant
CfD Qualification – Eligibility Requirements
43
Connection Agreement(s) / Countersigned
Offer(s)
Supplemental Requirements for phased Offshore
projects
Supply Chain Plan >=300MW
Planning Permission(s)
CfD Qualification – Connection Agreements
44
• Agreement(s) for connection with TSO and/or /DNO for >=75% of capacity
Direct
Connection
• Agreement(s) between Private Wire Generator and Private Wire Network Operator
• Agreement(s) between Private Wire Network Operator and TSO/DNO
Partial
Connection
• Agreement(s) between Private Wire Generator and Private Wire Network Operator
• Confirmation that no connection agreement applies or is to apply
Islanded
CFD Unit
CfD Qualification – Planning Permissions
45
Permissions must relate to CfD Unit and getting the power to the transmission or distribution or private wire network
No requirement to provide permissions for the TO/DNO works
Section 36
Crown Estate Agreement for Lease / Lease (Offshore only) Marine Licence
Marine LicencePlanning Permission
Development Order /
Transport and Works Act Order
CfD Qualification - Exclusions
46
CCS and Nuclear
AD, Hydro, Onshore Wind, Solar =< 5MW
Not to be in receipt of another subsidy (RO, CFD, CM, NFFO, RHI if EfW with CHP) except:
RO accredited registering additional capacity >=5MW
RO accredited registering subsequent offshore phases
Biomass co-firing stations can convert from RO to CFD
Non GB
47
Additional Information (inc.)
Name and address
Project name and location
Capacity (MW)
Target Commissioning Date and start of Target Commissioning Window
For LCCCo to complete CfD contract
Evidence of incorporation – e.g. Company Registration and
VAT/Tax Registration
Valid Incorporation
Version number of standard or modified terms
Contract terms
CfD Qualification – Other Information/Data
CfD Qualification – Application process
48
1. Application via system
2. User Registration
3. Upload documents
4. Application submitted
5. System closure
CfD Qualification – Eligibility process
49
1. Application Closing Date
2. 10 working days to determine
if qualifying application
3. Assess application
4. Verification checks
5. Take into account any contradictory
evidence
6. Issue determination to
Applicant
7. Notify Applicant via
system
Applicant Data & Evidence requirements – Planning Permission(s)
50
Full documented evidence of planning permission(s)
Evidence must clearly state location, MW, dates and technology (where not stated, indicate why)
Planning permission(s) for CfD Unit and works to allow electricity to be supplied to network (unless being undertaken by someone other than applicant)
Planning Permission(s) (including Crown Estate Lease)
Applicant Data & Evidence requirements – Connection Agreement(s)
51
Declaration of connection type
Full documented evidence of connection agreement(s)/countersigned offer(s)
Evidence must clearly state location, MW, dates and technology (where not stated, indicate why)
If “islanded” or “partial”, frequency of provision of metered data volumes
If “islanded”, declaration that no connection agreement is or is to apply
Connection Agreement(s) / Countersigned Offer(s)
Applicant Data & Evidence requirements
52
• Full copy of approval certificate
• Evidence must clearly state location, MW, dates and technology
Supply Chain Plan >=300MW
• System Validation
Supplemental Requirements for phased Offshore
Projects
• Full copy of certificate of incorporation and VAT Registration certificate (or equivalent if non UK)Incorporation
Applicant Data and Evidence requirements - Exclusions
53
Certify that not an Excluded Application
Certify that not in CM, NFFO or CfD
DB cross check against public registers
Either certify that not in RO, or if certify that in RO confirm which type of dual scheme plant applies
DB/Ofgem cross checking process
Other Applicant Data & Evidence
54
Information required for LCCC to complete CfD contract
Name and contact details of Applicant/Agent/Person entering into CfD Contract
Project specific details e.g. MW, location
Certify that information provided in Application is true and correct
CfD Process – End to End
55
5. Appeal 6. Valuation
7. Sealed Bids
8. Allocation & Independent
Audit
9. Allocation Notification
1. Pre-Application Activities
2. Application 3. Qualification
4. Review
CfD Qualification – Reviews
56
Applicant
• Submit Review Notice via system within 5 working days
• Cover only those areas subject to non qualification determination
• No new evidence but can clarify original evidence
DB
• 10 working days from date of review notice to reply to Applicant
• Notify Qualifying Applicants that in receipt of review notices
Outcome
• Non qualification review notice which overturns or upholds original decision and provides reasons for the determination
• Applicant to log into system and view DB decision
CfD Qualification – Reviews
57
Review Requirements
Concise statement identifying
dispute
No new documentary
evidence but can clarify original
evidence
Schedule listing the
documents submitted
Succinct presentation of arguments
Summary of grounds for dispute
CfD Process – End to End
58
5. Appeal 6. Valuation
7. Sealed Bids
8. Allocation & Independent
Audit
9. Allocation Notification
1. Pre-Application Activities
2. Application 3. Qualification
4. Review
CfD Qualification – Appeals
59
Applicant
• Submit Appeal and Review documents to Ofgem directly
• 5 working days to submit an appeal to Ofgem
Ofgem• 30 working days to respond• Allocation may proceed if overrunning
DB
• Appeal Statement to Ofgem• Notify qualifying applicants that there are
appeals in progress• Update Appeals Register once CfD
Notifications have been issued
Outcome
• Can overturn or uphold original decision and provide reasons for the determination
• Ofgem advise Applicant and DB stating determination and date of determination
CfD Qualification – High Court
60
Applicant • 28 days to appeal to High Court
High Court• High Court could ask Authority to
reconsider their decision or direct DB to reinstate as a Qualifying Applicant
Contracts For Difference
Lunch
CfD Process – End to End
62
5. Appeal 6. Valuation
7. Sealed Bids
8. Allocation & Independent
Audit
9. Allocation Notification
1. Pre-Application Activities
2. Application 3. Qualification
4. Review
CfD Process – End to End
63
5. Appeal 6. Valuation
7. Sealed Bids
8. Allocation & Independent
Audit
9. Allocation Notification
1. Pre-Application Activities
2. Application 3. Qualification
4. Review
CfD Budget
64
LCF Budget includes Renewables Obligation (RO), Small Scale Feed in Tariff, FIDeR & generic CfD.
Levy Control Framework caps for Low Carbon Support
Initial budget to be published July 2014, final budget anticipated late September 2014.
CfD Allocation – Round 1
Pot 1 - Established Technologies
Onshore Wind (>5 MW)
Solar Photovoltaic (>5 MW)
Energy from Waste with CHP
Hydro (>5MW and <50 MW)
Landfill Gas
Sewage Gas
Pot 2 - Less Established Technologies
Offshore Wind
Wave
Tidal Stream
Advanced Conversion Technologies
Anaerobic Digestion
Dedicated biomass with CHP
Geothermal
Potential Pot 3 - Established Technologies
Biomass Conversions
Scottish island onshore wind projects Potential Pot 4
100MW Minimum across the RO & CfD
Valuation Formula
• Strike Price minus Reference PriceTop-Up Payment
• e.g. Transmission losses, hours to days.• Set out in Allocation Framework
General conversion factors
• e.g. Load factors• Set out in Allocation Framework
Technology Specific Factors
• Provided by ApplicantCapacity
X
X
X
67
CfD Valuation
Budget Valuation FormulaPots
Budget Assessment;by Pot, total value / minima / maxima
in each year
Allocation
DB Notification to SoS (DECC)
SoS (DECC) increase budget?
CfD Process – End to End
68
5. Appeal 6. Valuation
7. Sealed Bids
8. Allocation & Independent
Audit
9. Allocation Notification
1. Pre-Application Activities
2. Application 3. Qualification
4. Review
CfD Allocation – Process Overview
69
Step 1• Check if Auction is required. If yes, applicants
notified to submit Sealed bids
Step 2 • Run Unconstrained/Constrained allocation
Step 3 • Independent Audit of DB Calculations
Step 4• SoS reviews; Proceed, Re-run or Cancel Allocation
Process.
Step 5 • DB CfD Notifications : (LCCC & Applicants)
CfD – Decisions to run Auction
70
NO Auction MIN AuctionMAX (only)
AuctionGeneral
Pot Auction
If…
No Pot Breach
And…
No Breach of Techs subject to MAX (MW)
Techs Subject to MIN can breach (MW)
If…
No Pot Breach
And…
Techs exceed MAX limit (MW)
Techs Subject to MIN can breach (MW)
All Unallocated MAX Rejected
If…
General Pot Breach
And…
Techs Subject to MIN breach (MW)
Unallocated MINs move to General Pot Auction
If…
General Pot Breach
Unallocated MINS considered
MAX constraints apply
Valuation of Qualifying Applications
[per POT]
Constrained Allocation Unconstrained Allocation
General AuctionMAX only Auction
MIN AuctionPOT
Auction
CfD Allocation – General Principles
15/16 16/17 17/18 18/19
Incr
easi
ng s
trik
e p
rice
bid
15/16
17/18
15/16
16/17
16/17
17/18
18/19
16/17
15/16
Budget Rule • Pot /Budget (Cannot Be Exceeded
Except for Pending Projects)
Constraint• Only competitive where binding
constraint (E.g. Pot/MIN/MAX)
Across Years• All projects in same Pot will
compete on strike price basis, regardless of delivery year
Bid Prices• Projects will be awarded in order of
lowest to highest strike price
Pay as Cleared
• Clearing Price set by most expensive successful project in each year (subject to cap at the Technology Admin Strike price).
CfD Allocation – Sealed Bids
Sealed Bids
Bidders submit the lowest strike price they are willing to accept.
General 5 Days sealed bid submission
window
No bids above the Admin Strike Price
Withdraw & re-submit bids during submission window
No bids accepted after window closes
System will default Admin Strike price if none is submitted
Flexible Bids Submit combination of different
bid price, capacity, TCW,& TCD
Max 10 Bids per project
Must be same Delivery year or later than original application
Must be same capacity or less than original application
CfD – Competitive Allocation Principles
74
Used to identify Successful
applicants and Strike Prices
Sealed bid process (includes bidder flexibility)
Each delivery year has a separate clearing price
Triggered by breach of Budget
or Maxima
Minimum allocated first
Allocation in ascending price
order (across years)
Years can close independently
CfD Allocation – Auction (MINIMA)Project SP
BidAdmin SP
Del Yr
MW Group
K 123 130 17/18 150 GEN
J 120 140 17/18 45 MIN
I 119 120 17/18 50 MAX
H 118 140 15/16 30 MIN
G 118 125 16/17 40 GEN
F 117 125 18/19 200 GEN
E 116 120 16/17 500 MAX
D 115 140 15/16 45 MIN
C 102 120 17/18 110 MAX
B 93 100 18/19 70 GEN
A 85 90 15/16 65 GEN
MIN Requires Auction since(D + H + J) MW is > 100MW, and General Auction is triggered
MIN Capacity set at 100 MW
15/16 16/17 17/18 18/19
Incr
ea
sin
g b
id p
rice
The valuation of ‘D’ & ‘H’ is compared against pot value to ensure both can be allocated
‘J’ Cannot be accepted in MIN auction and is to be considered in general auction
‘D’ & ‘H’ Provisionally allocated with a Cleared price of 118 in 15/16
115
118 This project sets clearing price
MIN = 100 MW
Maximum Value of MINIMA
CfD Allocation – Auction (General)
Stack Bids in order of increasing SP
Start Allocating to Bid of lowest Strike Price
All Successful projects delivering in same year gets the same cleared price except MINs - (Subject to Admin Strike Price per Tech)
MAX limits apply
Project SP Bid
Admin SP
Del Yr
MW Group
K 123 130 16/17 150 GEN
J 120 125 15/16 45 MIN
I 119 120 17/18 100 MAX
G 118 125 16/17 40 GEN
F 117 125 15/16 200 GEN
E 116 120 16/17 500 MAX
C 102 120 17/18 30 MAX
B 93 100 18/19 200 GEN
A 85 95 15/16 70 GEN
Inc
rea
sin
g b
id p
ric
e
15/16 16/17 17/18 18/19
MIN = 100 MW
Maximum Value of MINIMA
A
B
C
MINS
E
MAX Capacity = 600 MW
MAX Exceeded 630 > 600
F
CP =95
I
G
CP = 117
Close Year
Reject all other projects for 15/16
Close Auction to all MAX
KBu
dg
et
CP = 120
CP = 123
CP = 123
CP = 93
CP =102
** CP = Cleared Price
CfD –Allocation Other Detailed Points
77
Bidder Flexibility
TiebreakersPending Bids
CfD Allocation – Flexible BidsProject SP Bid Del Yr MW
A2 115 16/17 60
C2 112 17/18 45
E2 108 18/19 70
A1 105 17/18 75
C1 100 17/18 60
D2 97 16/17 60
D1 94 16/17 80
H1 93 17/18 35
B2 92 16/17 50
F1 90 17/18 80
E1 88 16/17 63
B1 85 15/16 50
Fle
xib
le B
ids
- In
cre
as
ing
Pri
ce
15/16 16/17 17/18 18/19
B1
Str
ike
Pri
ce
Bid
s
B2
D1
C1
D2
A1
A2
Bids are assessed in order of strike price bid (cheapest first) . If they fit the budget profile (and don’t exceed MAX) they are accepted.
Same Commissioning Year Flexibility
If a bid is successful, remove from stack all other bids relating to same project
E1
E2
Close Year
Reject all other bids for 16/17
Budget would be exceeded in 16/17
Next cheapest bid is for
same project
No budget or MAX breach, accept and remove other
‘B’ bids from stack
F1
H1
Budget would be exceeded in 17/18
Next cheapest bid is not for same project
Close Year
C2
CfD Allocations – Tiebreaker Rules
Tie-breaker rules applies where 2 or more projects with the same strike price bid, both cannot be awarded a CfD without exceeding budget limits
Assess all combination of tied projects which exceeds budget
Choose combination of projects which best uses budget
For further ties – Random number generator is to be used
Confirm projects with same S.P would exceed budget
Consider other flex bids for unsuccessful projects
Remove other flex bids for successful projects
CfD Allocation to Pending Applicants
Pending Applicants will be required to submit bids during the Bid Submission Window (If Tech is subject to an Auction)
Pending Bids will only be opened (used) by the DB if the Authority concludes the applicant is a Qualifying Applicant
If following CfD Notifications the Pending Applicant becomes a Qualified Applicant, and
If No Auction - the Administrative Strike Price would be applicable to the Pending Application
If Auction – The Pending Applicants lowest bid had to be equal to or lower than the clearing price for the Auction (Relevant Pot & Year); in order to be awarded a CfD.
CfD Allocations Audit & SoS Actions
DB will appoint Independent Auditors (IA)
What the Independent Auditor Will Do
Unconstrained Round (for each Pot)
Verify if the decision not to Auction is correct
Constrained Allocation, (for each Pot)
Verify if the decision to go Auction is correct
Verify if Sealed Bids (Flexible Bids) were used appropriately
Verify if the Auctions rules were used appropriately to decide result of the Auction
SoS Actions
SoS review Audit Report and DB Recommendations
SoS may choose to:
Proceed to Allocation Notifications
Re-run Part/All of the Allocation Process
Terminate & Cancel the Allocation Round
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CfD Allocations Notifications
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Following successful Allocation process, DB will notify
Unsuccessful Applicants
CfD Counterparty of all Successful Allocation
To Include all relevant applicant details submitted at application
Strike Price, Delivery Dates, Capacity relevant to CfD award
Successful Applicants of their CfD Award
Strike Price, Delivery Dates, Capacity relevant to CfD award
Following Allocation Notifications, DB will
Publish Allocation Round Report
Publish CfD Appeals Register (If Applicable)
Contracts For Difference
Coffee Break
Implementation Next Steps
CfD Process – End to End
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5. Appeal 6. Valuation
7. Sealed Bids
8. Allocation & Independent
Audit
9. Allocation Notification
1. Pre-Application Activities
2. Application 3. Qualification
4. Review
Implementation Coordination Calendar
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Eligibility and Allocation 21 July 2014
Application and System Readiness Aug 2014
Applicant and System Readiness Sept 2014
Implementation progress Oct 2014
System webinar Sep/Oct 2014
Go-Live Process – Applicant Support
User Registration
• Companies register and create Users.
• System available late Sept/early Oct
Guidance
• Pragmatic Guide to Qualification and Allocation (1 Sept)
• FAQs (1 Sept)
• Round Guidance
• Draft 1 Sept
• Final 30 Sept
Training
• Screen cast late Sept
• IS Manuals
Industry Readiness
What else do you want / need from DB to be ready for October?
CfD Manager
EMR Stakeholder Manager
Industry Participants CfD Success Factors
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Category Measures of success
Systems Systems to be available in a timely manner and have ability to allow multi-logon access.
Systems The system should be user friendly and be easy to use for all participants with good guidance notes and documentation. Navigation in the system should be easy to follow.
Systems Terminology should be consistent between that used in the system and policy documentation.
Systems Have a dedicated central helpdesk for applicant queries and technical support.
Systems The systems and process should minimise the risk of disputes and the DECC should not radically change the rules and timelines.
Systems Ensure that the system is reliable and any pinch points are resolved beforehand to avoid unavailability during critical periods.
Industry Participants CfD Success Factors
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Category Measures of success
Process Have an effective way of providing feedback to industry participants for key updates related to CfD applications.
Process Useful to have worked examples which step through the process of application of a CfD.
Process Guidance documentation on pre-conditions and requirements on what a CfD applicant needs to provide for qualification to be made available so that there is no room for un-necessary errors leading to disqualification.
Process One common channel of communication between the various parties to issue information / updates to industry participants.
Process Transparency provided on notices and relevant publications (e.g. budget notice).
Key documents
EMR Statutory Instruments
The Contracts for Difference (Allocation) Regulations 2014 http://www.legislation.gov.uk/id/ukdsi/2014/9780111116777
The Contracts for Difference (Definition of Eligible Generator) Regulations 2014 http://www.legislation.gov.uk/id/ukdsi/2014/9780111116807
The Contracts for Difference (Standard Terms) Regulations 2014 http://www.legislation.gov.uk/id/ukdsi/2014/9780111116838
The Contracts for Difference (Electricity Supplier Obligations) Regulations 2014: http://www.legislation.gov.uk/ukdsi/2014/9780111116784/
The Electricity Market Reform (General) Regulations 2014 http://www.legislation.gov.uk/id/ukdsi/2014/9780111116791
The Electricity Capacity Regulations 2014: http://www.legislation.gov.uk/ukdsi/2014/9780111116852/
Key documents
Associated Supporting Documentation
Implementing EMR This publication provides stakeholders with a comprehensive overview of EMR policy at a point where the implementing secondary legislation is laid before Parliament. https://www.gov.uk/government/publications/implementing-electricity-market-reform-emr
New electricity interconnection to GB – operation and revenues: This independent report shows potentially significant revenues are available on the basis of price arbitrage, offering confidence to investors. https://www.gov.uk/electricity-network-delivery-and-access#offshore-electricity-networks-development
Analysis of CfD Supplier Obligation funding options – Redpoint Energy: This report provides an assessment of CfD payment volatility and reserve fund size to support analysis on Supplier Obligation design and estimated costs and benefits as detailed in the Supplier Obligation Impact Assessment. https://www.gov.uk/government/publications/electricity-market-reform-contracts-for-difference
Associated Supporting Documentation
Updated draft Allocation Framework: This sets out the allocation process including the auction rules and the valuation formula that will be used in the allocation process. A final version of the Allocation Framework will be published in advance of the first allocation round opening for application. Available at: https://www.gov.uk/government/publications/electricity-market-reform-contracts-for-difference
Updated High Level Summary of the Allocation Process This summarises how the Allocation Regulation and Allocation Framework work together to establish the allocation regime. Available at: https://www.gov.uk/government/publications/electricity-market-reform-contracts-for-difference
The Government response to the October 2013 EMR Consultation on proposals for implementation: https://www.gov.uk/government/consultations/proposals-for-implementation-of-electricity-market-reform
Key documents
Associated Supporting Documentation
The Government Response to the January Code and License consultation: https://www.gov.uk/government/consultations/emr-consultation-on-industry-code-and-licence-modifications
The Government Response to the April Balancing and Settlement Code modifications consultation: https://www.gov.uk/government/consultations/emr-modifications-to-balancing-and-settlement-codebsc-subsidiary-documents
The Government Response to the March Low Carbon Contracts Company and Electricity Settlements Company operational costs consultation: https://www.gov.uk/government/consultations/consultation-on-the-emr-operational-cost-levies
The Government Response to the March Consultation on directions to offer Contracts for Difference: https://www.gov.uk/government/consultations/electricity-market-reform-emr-contracts-for-difference-regulations
Key documents