FiT CfD costs become clearer

Our latest Informer Series webinars provided insight on where energy prices and non-commodity costs are heading.  Mark Cox, Key Account Manager and presenter of our latest webinar, looks at the Feed-in Tariff Contract for Difference (FiT CfD) charge which has recently started to appear on bills.

Businesses never like uncertainty so energy buyers will welcome the improved visibility we now have on the likely costs of the FiT CfD scheme in the years ahead.

The scheme, which is replacing the existing Renewables Obligation (RO), provides guaranteed support for larger renewable and low carbon generation projects.

One big unknown when we held our previous webinars in November was whether the European Commission would approve a CfD investment contract awarded to Drax at £100/MWh for its third biomass unit conversion at its North Yorkshire site.

That approval has now been secured and with a number of major wind projects - both on and offshore – also in the pipeline for commissioning, we now have much more certainty from a price-setting perspective, although actual charges will depend on exactly when projects come on stream, their generation volumes and market prices on the day.

For business budgeting purposes that clarity is welcome, but it hasn’t changed the fact that energy buyers are still facing a rapid rise in FiT CfD charges in the years ahead as volume rockets from 1TWh to 30TWh by 2020.

Our latest webinar looked in detail at forecast costs under the FiT CfD. Although the charge is a relatively insignificant part of bills in the current financial year, our forecasts show a dramatic increase by 2019-20 and beyond.

It is clearly something energy buyers need to keep on top of and to budget for accordingly.

As well as the latest insight on the FiT CfD, the webinar also looked in detail at what is happening with wholesale prices and why, along with latest forecasts on system and network charges. We also look at the impact of the paying for the Capacity Market which aims to ensure security of supply by providing a payment for reliable sources of energy when needed during peak periods.

To see our latest forecasts in more detail, watch the webinar here or take a look at our infographic below...