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Contracts for Difference

A Contract for Difference (CFD) is a private law contract between a low carbon electricity generator and the Low Carbon Contracts Company (LCCC), a Government-owned company. A generator party to a CFD is paid the difference between the 'strike price' - a price for electricity reflecting the cost of investing in a particular low carbon technology - and the 'reference price'- a measure of the average market price for electricity in the GB market. It gives greater certainty and stability of revenues to electricity generators by reducing their exposure to volatile wholesale prices, whilst protecting consumers from paying for higher support costs when electricity prices are high.

Further detials on CfD on the Gov.UK website can be found here.

The Low Carbon Contracts Company can be accessed here.