1. Contracts for Difference
Implementation Update
21st January 2015

2. Welcome, Agenda and Safety

3. Agenda CfD Round 1 Progress and Timeline CfD Allocation Overview
Sealed Bids Rules & Form Demo
Applicant Processes (Submit & Withdrawals)
CfD Contract Signing Process
CfD Contract Management
LCCC Key Contacts
Q&A & Close
121 discussions

4. Contracts for Difference
Round 1 Progress and Timeline
John Perkins
CfD Manager

5. Round Variation / Budget Revision Notices5.
Appeal
6. Valuation
7. Sealed Bids
8. Allocation & Independent Audit
9. Allocation Notification
1. Pre-Application Activities
2. Application
3. Qualification
4. Review
Applicants
Request Review
Request Appeal
Apply
Round Variation / Budget Revision Notices
Assess Eligibility
Qualified Applicants
Review
RO Check
Appeal

6. Round Variation / Budget Revision Notices5.
Appeal
6. Valuation
7. Sealed Bids
8. Allocation & Independent Audit
9. Allocation Notification
1. Pre-Application Activities
2. Application
3. Qualification
4. Review
Applicants
Submit Sealed bids if requested
Round Variation / Budget Revision Notices
Value qualified applicants
Request sealed bids if required
Allocation & Independent Audit

7. Applicant Options in a Bid Window
Defaults to single bid as per original application if none submitted
Note: Potential NDD policy impacts
Submit Sealed Bids
Ability to submit new sealed bids
Default as above
Withdraw Sealed Bids
Note: Impact on Eligibility for Renewables Obligation
Withdraw Application

8. Allocation Reports Review5.
Appeal
6. Valuation
7. Sealed Bids
8. Allocation & Independent Audit
9. Allocation Notification
1. Pre-Application Activities
2. Application
3. Qualification
4. Review
Applicants
Contract Signature
Allocation Reports Review
CfD Notification
Appeals Register
Issue Contracts
CfD Register

9. LCCC prepare Contracts
Expected Key Dates
Process Step
Date
DB Notice to SOS
20-Jan
SOS Budget Review
21-27 Jan
Auction Notice
28-Jan
Sealed Bid Submission
29 Jan - 4 Feb
Allocation
5-20 Feb
SOS review
23 & 24 Feb
CFD Notification
26 Feb
LCCC prepare Contracts
27 Feb - 12 Mar
Contract Signature
13-27 Mar

10. National Grid Contact Details
' Phone:
(calls recorded on this number) *
website:

11. Contracts for Difference
Allocation Rules
Yasharn Smith
EMR Delivery Manager

12. CfD – Competitive Allocation Principles
Used to identify Successful applicants and Strike Prices
Sealed bid process (includes bidder flexibility)
Each delivery year has a separate clearing price
Triggered by breach of Budget
Minimum allocated first
Allocation in ascending price order (across years)
Years can close independently

13. When is an Auction Required Illustration only
NO AUCTION REQUIRED

14. Maximum amounts consumers would be expected to fund in each year
Budget Notice
£m 11/12 prices
15/16
16/17
17/18
18/19
19/20
20/21
Pot 1 (established) 50 65
Pot 2 (less established)
155
235
Pot 3 (biomass)
Total
220
300
Maximum amounts consumers would be expected to fund in each year
Conversion factor to translate budget to 2012 prices :

15. CfD Allocation – General Principles
Budget Rule
Pot /Budget (Cannot Be Exceeded Except for Pending Projects)
Constraint
Only competitive where binding constraint (E.g. MIN capacity/Pot Budget)
Across Years
All projects in same Pot will compete on strike price basis, regardless of delivery year.
Years can close independently
Bids/ Prices
Projects will be awarded in order of lowest to highest strike price
Sealed bid process (includes bidder flexibility)
Pay as Cleared
Clearing Price set by most expensive successful project in each year (subject to cap at the Technology Admin Strike price).

16. CfD Allocation – Flexible Bids
Close Year
Project
SP Bid
Del Yr MW A2
115
16/17 43 K1
113
18/19
700 G3
112 5 C2
108
17/18 28 A1
105
15/16 47 C1 38 D6 97 42 D1 94 80 H4 93 35 B2 92 50 F2 90 E1 88 63 B7 85 A2 K1 
Close Year
Tiebreak with A1 & C1 G3
C 2 A1 C1
Flexible Bids- Increasing Price 
A1 uses budget best in final year
Reject all other bids for 16/17
Strike Price Bids
Next cheapest bid is for same project
Close Year D6  D1
Budget would be exceeded in 16/17 H4  B2
Bids are assessed in order of strike price bid (cheapest first) . If they fit the budget profile after clearing consideration, they are accepted.
Same Commissioning Year Flexibility
If a bid is successful, remove from stack all other bids relating to same project  F2  E1  B7
15/16
16/17
17/18
18/19

17. CfD Allocations – Tiebreaker Rules
Tie-breaker rules applies where 2 or more projects with the same strike price bid, both cannot be awarded a CfD without exceeding budget limits
Confirm projects with same S.P would exceed budget
Assess all combination of tied projects which exceeds budget
Choose combination of projects which best uses budget
For further ties – Random number generator is to be used
Consider other flex bids for unsuccessful projects
Remove other flex bids for successful projects

18. Contracts for Difference
Sealed Bids
Giampaolo Panizio
EMR CfD - Commercial Analyst

19. Sealed Bids – Relevant Material
Sealed Bid Submission User Guide is available on the Delivery Body Portal

20. Sealed Bids Submission Rules
General
Bids must be in 2012 prices (£/MWh)
Withdraw & re-submit bids during submission window
No bids accepted after window closes
Relevant ASP is used if no bids are submitted
Detail
Submit combination of different bid price, capacity, TCW, & TCD
No bids above the ASP
Max 10 Bids per project
No more than 3 bids for the same Delivery Year (DY)
No two bids can have the same price
Must be same DY or later than original application
Must be same capacity or less than original application
TCD must fall within the TCW
Lowest price in each DY expressed to nearest whole pence (e.g. £100.01)
All other bids (except for lowest in each DY) expressed to nearest 0.1 pence (i.e. £ )
Only 1 Sealed Bid can have the same first DY and capacity as original application
For AD, Hydro, Onshore, Solar projects the bid capacity must be > 5 MW

21. Phased Projects’ Specific Rules
Detail
Must include a single Strike Price to apply to all phases
The total capacity of all phases must be no greater than 1500 MW
The first phase must represent at least 25% of the total capacity of the CFD Unit after all phases are completed
The first phase is targeted to complete by a date no later than 31st March 2019
The target commissioning date of the last phase is no later than 2 years after the date referred above

22. Sealed Bids Form Demo Original Applications’ Information:
Single Phased Project
Technology: Onshore Wind
Applicant name: Panizio Ltd
Application ID: CFD-PNZO-01-01
Name of CFD Unit: Eolo Farm
TCD: 15 July 2016
DY: 2016/2017
TCW start Date: 1 January 2016
TCW end Date: 31 December 2016
Capacity: MW
ASP: £95 per MWh

23. Sealed Bids Submission Guidance
Guidance Notes
Excel Macros must be enabled
Do NOT manually hide or unhide rows
Do NOT copy and paste data into cells
Do NOT copy and paste the form in another excel file
Do NOT rename the sealed bids form
Validate Sealed Bids and save the form

24. Contracts for Difference
Applicant Processes
Yasharn Smith
EMR Delivery Manager

25. Sealed Bids Submission process
Auction Notice Published
Pre-populated Sealed Bid Forms
(Sent on - 16/12/14)
Applicants Fill in Sealed Bid Forms
Applicants Validate Form
Send form to DB
Withdraw Application/ Sealed Bids & Resubmit
DB Uses Bids to Run Auction

26. Auction Notice Notice of Auction will be sent from the DB to:
Inform qualified applicants that the value/capacity (min) of a pot(s) has been exceeded and therefore a competitive allocation is required for that pot;
Inform applicants of the dates for opening and closing sealed bids submission window
Provide links to:
to guidance on how to submit and fill a sealed bids form
Sealed Bids withdrawal form
Application withdrawal form

27. Application/ Sealed Bids Withdrawal
Applicants participating in an auction may
Withdraw applications during the submission window;
Withdraw and re-submit sealed bids during the submission window.
The CfD sealed bids withdrawal form and the CfD application withdrawal form will be made available on the EMR DB Portal when an auction commences
The DB has contingency processes in place to manage these processes and will communicate to applicants if required

28. Submission through Egress
Applicants must send filled in (validated) sealed bids form/withdrawal forms to the Delivery Body through Egress Switch:
Applicant contact details required here
DB will not accept Sealed Bid forms from unregistered person

29. Submission through Egress
Applicants must not change the file name of the pre-populated Sealed Bid form sent from the DB
Upload file to be sent here
Select CFD Sealed Bids on the [Type of Submission] drop down box;
Click on the Add Files button;
A file dialog box will appear which enables
Users to select their files, upload Validated Sealed B
Enter an alternative address if required for copies of submission to be shared

30. Preparing for Contract Signing and Next Steps
Nic Rigby
Low Carbon Contracts Company
IC Event
21 January 2015

31. Agenda Introduction Notification to Contract Signing
Initial Conditions Precedent and Beyond

32. Disclaimer
Parties should rely upon the drafting of the relevant CFD Agreement and FiT CFD Standard Terms and Conditions in relation to the contract they enter into, not these slides
Parties are recommended to obtain their own Legal advice.
Once Allocation Results are announced Low Carbon Contracts Company will not be available for any discussions on contract interpretation.

33. Contract Management Tasks
Pre-Application
Considering requests for minor and necessary amendments to generic CFDs before the potential applicant decides to apply for a CFD
From Allocation to Start Date
Execution:
preparation of CFD and arranging execution
satisfaction of Initial Conditions Precedent
Milestone Satisfaction: Substantial Financial Commitment by Milestone Delivery Date.
Start Date: satisfaction of Further Conditions Precedent and certification of Start Date.
Post Start Date (when payment flows commence)
Payment and settlement
Reference Price review and Strike Price indexation
Audit of metering and reporting
Fuel monitoring and sampling compliance
Today’s Agenda

34. What Does Success Look Like
Win the offer of a CfD Contract in the auction
If you get past 1 then you must
Sign a Contract by 27 March
Meet Initial Conditions Precedent within 10 Business Days of signing the CfD Contract

35. Agenda Introduction Notification to Contract Signing
Initial Conditions Precedent and Beyond

36. The Contracts for Difference (Standard Terms) Regulations 2014
Offer to contract 10.—(1) An offer of a CFD is made by the CFD counterparty signing two copies of a CFD completed in accordance with regulation 9(3) and sending both copies to the eligible generator. (2) The CFD counterparty must make an offer of a CFD within 10 working days of receiving a CFD notification. (3) The eligible generator, to whom the offer of a CFD is made, enters into a CFD where— (a) the eligible generator signs both copies of a CFD and returns one copy to the CFD counterparty; and (b) the CFD counterparty gives the eligible generator a notice stating that the CFD counterparty has received a copy of the CFD from the eligible generator which has been signed by both contracting parties. (4) The CFD counterparty must give the notice under paragraph (3)(b) as soon as reasonably practicable after the CFD counterparty receives a signed copy of a CFD from an eligible generator. (5) Where a CFD is entered into, the CFD counterparty must inform the delivery body as soon as reasonably practicable. Failure to accept an offer 11.—(1) Where the CFD counterparty does not receive a signed copy of a CFD from an eligible generator within 10 working days of the offer being made, the offer lapses. (2) Where an offer lapses, the CFD counterparty must, as soon as is reasonably practicable, give the eligible generator and the delivery body a notice which states that the offer has lapsed.

37. End of Auction to Contract Signing
Action by
Process
Timing
N Grid
Provide Low Carbon Contracts Company (LCCC) with list of successful Applicants
26 February
LCCC (Your allocated Contract Manager)
Send data ex N Grid and draft contract to Applicants for checking
LCCC
Send 2 copies of Signed Contract to Applicants
Within 10 Working Days (Regs)
LCCC/ Applicants
Signing day(s)
Week beginning 23 March
Applicant
Return 1 signed copy of Contract to LCCC
Working Day (Regs) = Weekdays – Bank Holidays in any part of the UK

38. In practice – Getting your contract signed
All parties allocated a CFD will get a dedicated Contract Manager
Each Contract Manager covers all the projects that are operated by a Company or Group.
Contract Managers already allocated to Investment Contract Generators.
Contract mangers appointed as soon as we receive Auction results
Nic Rigby
Arezou Farhadi
James Krzyszkowski
Puk Lykke-Moller
Stephanie Houston

39. In practice – first 10 working days
Low Carbon Contracts Company will write and set out exactly what you must do and by when in a “Key Dates Letter”
Contract Managers appointed
The LCCC have very limited time to check information provided by the generator in application to delivery body
We can only change information that was not used as part of decision making process in allocation
We will be able to change a postcode but not MW
If we do not get a very rapid reply to any requests for confirmation of data - LCCC will have no choice but to send agreement with the information that we hold
Please note allocation is not public knowledge at this point!

40. How the process works in more detail
WorkingDays (Regs) Counter
Typical date
Time
Obligation
Action
Thur
26 Feb
Before 5pm
Process initiated
N Grid provide data to Low Carbon Contracts Company
10, and initiates new counter
12 Mar
Last date for Low Carbon Contracts Company to send out 2 signed copies of contract
LCCC will e mail scanned copies via Egress and post paper copies. 10
Fri
27 Mar
5pm
1 copy of Contract must arrive at Fleetbank House
Scanned via Egress e mail and/or deliver paper copies.

41. What you will receive The CFD agreement + Signature required at
The Conditions applicable to the CFD Agreement between the Parties are the terms and conditions set out in version 1 of the document published by the Department of Energy & Climate Change entitled “FiT Contract for Difference Standard Terms and Conditions” as at 29 August 2014 (as amended, modified, supplemented or replaced by the CfD Agreement and as may be amended, modified, supplemented or replaced from time to time in accordance with the Conditions). For the purposes of confirmation of this and identification, the Parties have signed this covering page to the Conditions.
Signature required at
- end of contract text, and
- on this page to confirm
29 August version of Standard
Terms and Conditions,

42. In practice – follow up
The LCCC must notify generators of receipt of countersigned agreement
LCCC must inform the delivery body of CFDs entered into
LCCC will notify both generator and delivery body of any lapsed offers
Parties that allow to lapse or terminate are subject to Non Delivery Disincentive
For 13 Months no re-applications allowed

43. Agenda Introduction Notification to Contract Signing
Initial Conditions Precedent and Beyond

44. Initial Conditions Precedent
Meet Initial Conditions Precedent (Schedule 1) within 10 Business Days
Legal opinion that Duly formed & power to enter contract
Standard letter available on our web site
Identification “Know your customer” checks
Provide map of facility

45. Extreme Compass Co-ordinates
Extreme co-ordinates – WGS84 Latitude Longitude
Northerly
Easterly
Southerly
Westerly

46. Map Requirements To scale and scale provided
Four extreme compass co-ordinates must be shown in WGS84 format
All boundaries must be shown
All mayor parts of the facility (eg sub station, turbine locations must be shown, fuel storage)

47. Contract Management Approach
Each Company who wins a Contract has a dedicated Contract Manager
Diverse experience of Contract Management and Industry experience
Once allocation round results are announced Low Carbon Contracts Company will not be available for any discussions on contract interpretation.
Trade Associations have lists of Legal Advisers
Post Initial Conditions Precedent Low Carbon Contracts will provide
Q & A (signposts) on Contract questions
But will not provide Contract explanation
Applicants need to access legal advice

48. Early preparation Check Egress works for all key parties
Send e mail to and we will reply via Egress.
2. If e mails re CfD Contract need to go to different or additional parties then
please inform Low Carbon Contracts Company
On Allocation Day when you receive “Key Dates Letter” including Invitation to Signing Ceremony.
3. Decide if you want to attend Signing Ceremony.

49. Fleetbank House
E mail to let us know when you intend to deliver or with any queries. Please use Egress for all confidential e mails re Contracts
Question and Answer document can be found at
Visit our web site or contact the team for more information 49

50. Closing Remarks
Low Carbon Contracts focus will be on getting everyone from offer of CfD to post Initial Conditions Precedent.
Private law contract as offered on 29 August 2014
All parties expect to be treated equally
Stretching the requirement can’t be done equitably
So no allowances can be made
Check your ability to meet Contract commitments, including Milestone Requirement. Be aware of impact of not signing, Non Delivery Disincentive. 50

51. Contracts for Difference
Closing Remarks and Questions
John Perkins
CfD Manager

52. National Grid Contact Details
' Phone:
(calls recorded on this number) *
website: