Question

To ask Her Majesty's Government whether the proposal to introduce contracts for difference auctioning has been reassessed following the European Commission's adoption of the final state aid guidelines for environmental protection and energy for 2014–2020; if so whether they specifically considered (1) the risk of the proposal failing to conform with the Commission's guidance that competitive bidding should be non-discriminatory due to the distinction the proposal makes between "established" and "less established" technologies, (2) the risk of the proposal failing to conform to the guidelines on the grounds of providing "asymmetric information" to the United Kingdom energy market, and (3) the risk of the proposal failing to conform with the Commission's guidance within General Conditions which stipulates that "the selection process should lead to the selection of beneficiaries that can address the environmental or energy objectives using the least amount of aid or in the most cost-effective way"; in each case, what conclusion they reached; and, in each case, what was the rationale forthe conclusion.

The move to competitive allocation of CfDs has been a long-standing feature of Electricity Market Reform. In early 2014, the Government consulted on proposals to move straight to competitive allocation for some technologies. EU ‘Guidelines on State aid for environmental protection and energy 2014-2020' were adopted in principle on 9 April 2014. Prior to that adoption, the European Commission worked with member states on the development of the guidelines, including through draft versions and receiving comments.

Implementation of key EMR policies is subject to State Aid approval, and the Government has been in discussion with the European Commission for some time to ensure our policies comply. These conversations remain constructive and we are making the strongest possible case for our policies which we believe are consistent with the new guidelines. To maintain effective working relationships with the Commission, we do not comment publicly on the specifics of cases.