In an exclusive article for Energy World – the monthly journal of the Energy Institute – Michael Wilkins, managing director of infrastructure finance ratings and head of environmental research at S&P Global, sets out the importance of the UK’s ‘Contracts for Difference’ (CfD) feed-in tariff scheme for reforming the country’s electricity market to include a greater percentage of renewably sourced energy.
In the article, Wilkins explains that by setting a ‘strike price’, whereby the government compensates for market price declines, CfDs guarantee stable revenues for renewable energy generators, thus attracting further investment.
Despite the clear benefits, not all projects will qualify for the government’s scheme. Much debate over whether to include the already mature onshore wind market, for example, is still underway. Wilkins argues that until the right steps are taken to offer developers clear policy, CfDs will not be able to live up to their full potential.
Read the article online here (please note: the magazine requires a subscription).