Question to the Department for Energy Security & Net Zero:

To ask the Secretary of State for Energy Security and Net Zero, what assessment his Department has made of the potential impact of changes to Contracts for Difference liabilities if wholesale electricity prices remain elevated on levels of fiscal risk.

Scaling up homegrown renewables reduces the UK’s exposure to volatile global fossil fuel prices, which protects consumer energy bills against future price shocks. The CfD two-way payment mechanism protects consumers when electricity prices are high, as if the reference price is above the strike price, the generator must pay back the difference.

During the energy bill crisis over Winter 22/23, when wholesale electricity prices were higher, the CfD scheme reduced the amount needed to deliver our energy bill support schemes by around £18 per typical household. [1]

[1] This estimate is based on DESNZ analysis of the 2022/23 Ofgem price cap and wholesale cost allowance methodology for Q4 2022 and Q1 2023.