LCCC Applauds Report on Its CFD Involvement

An independent study launched 13 August, has commended the Low Carbon Contracts Company (LCCC) for the part it has played in the first operational year of the Government’s Contracts for Difference (CFD) scheme.

LCCC, which celebrated its first birthday on 1 August, is the independent counterparty to CFDs and has been lauded by industry for the way it has supported developers of renewable energy and electricity suppliers involved in the scheme. The scheme is part of the Government’s wider Electricity Market Reform (EMR) programme designed to attract £100bn of investment into low carbon generation this decade alone.

LCCC Chief Executive, Neil McDermott, said: “We welcome feedback from our stakeholders at any time of the process but I’m pleased that the results show we haven’t just done what we were set up to do – but we’ve done it well.

“Our role within EMR, however, is clear. We are the designated counterparty to CFDs and we are managing CFDs relating to projects that are planning to deliver over 5.5GW additional low carbon capacity by 2020 – which is equivalent to almost 7% of current total installed electricity capacity in the UK.”

He added: “Our targeted and proactive engagement with industry was pivotal in the contract signing process and in ensuring we got all 27 CFD contracts signed on 25 March and our dedicated Contract Managers continue to work with those projects through each key milestone in the CFD process towards the delivery of new low carbon generation.”

The report was conducted by agency Bell Pottinger earlier this year to gain insight from industry into LCCC’s first year of CFD implementation. Stakeholders in the report defined LCCC’s role as critical in the process. The report follows the recent publication of the LCCC’s Annual Report which was published on Monday 3 August.

CFD Implementation

A main area of recommendation from industry was in the way LCCC conducted its CFD implementation events with industry. In particular LCCC’s Contract Management team were seen as “very effective in providing information (to stakeholders) with one adding “the seminars have been extremely thorough and necessary. Overall…brilliantly well done.”

Development Opportunities

A number of trade bodies also suggested that LCCC could take on a broader role in the end to end cycle of the CFD process in order to help organisations through the logistical elements of CFD delivery.

Members of the investor community that were interviewed felt LCCC should provide a facility to bring transparency to the market “due to its apolitical, stable position and by hosting investor related events.”

Consumer Engagement

It was also noted that there room for improvement in the engagement of consumers on EMR and that LCCC could step into this space by supporting the provision of helpful information.

The study was conducted at an early stage in the CFD process at a time when the first CFD signatories had been announced and the report also recommends further studies be done as EMR progresses adding “LCCC has succeeded in providing a good level of education and support to priority stakeholders, providing a strong platform for future engagement.”

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