Apply for a Contract for Difference

These rules apply in Great Britain. A project in Northern Ireland cannot apply.

How a Contract for Difference works

A Contract for Difference (CfD) is a contract between you and the Low Carbon Contracts Company (LCCC), a government-owned company that acts as the counterparty. It fixes a strike price for each megawatt hour your project generates, and the strike price is adjusted each year for inflation.

The strike price is compared with a reference price, a measure of the market price of electricity. When the reference price is below your strike price, LCCC pays you the difference. When it is above, you pay the difference back. Electricity suppliers fund the payments, so the contract protects you from falling wholesale prices and protects consumers from paying more when prices are high.

The term is set in each round's CfD agreement. In the Allocation Round 8 agreement it is 20 years for offshore wind, floating and other deepwater offshore wind, onshore wind, remote island wind and solar PV, and 15 years for every other technology.

Who does what

The National Energy System Operator (NESO) runs each allocation round as the delivery body and decides whether you qualify. LCCC issues the contract, manages it while you build and pays you. Ofgem decides qualification appeals.

Which pot your project competes in

For each round the government groups technologies into pots, and each pot has its own budget. If the projects that qualify in a pot would cost less than its budget, they all get the administrative strike price, which is the ceiling for that technology. If they would cost more, NESO holds a sealed-bid auction. You bid a strike price no higher than the ceiling, and generally the lowest bids win.

The grouping changes between rounds, so read the round's pot and price notice. Allocation Round 8 uses five pots.

Nuclear stations and stations connected to a complete carbon capture and storage system cannot apply.

Check your project is eligible

The Contracts for Difference (Allocation) Regulations 2014 set the general rules, and each round's allocation framework can add to or remove them. Your project must meet these tests:

• It has not been commissioned. Allocation Round 8 makes one exception, for repowering a station that is reaching the end of a 25-year operating life.
• It is not small. Solar PV, onshore wind, anaerobic digestion and hydro projects of 5MW or less cannot apply.
• It does not already have a CfD or a capacity agreement, and it has no capacity market application awaiting a decision.
• Its output is metered separately from any other generating station.
• You can give copies of the planning consents for the works that build the project and connect it to the grid. In Allocation Round 8, fixed-bottom offshore wind could apply before full consent as long as no consent had been refused.
• You can give a connection agreement that secures at least 75% of the project's capacity estimate, or evidence of how you will use a private network.
• An offshore project has a lease, or an agreement for lease, from the Crown Estate or its Scottish equivalent.
• A project of 300MW or more has a supply chain statement from the Secretary of State, or a Clean Industry Bonus statement instead.

Offshore wind projects can also compete for the Clean Industry Bonus, extra revenue for investing in more sustainable supply chains, in a process that runs before the main auction.

Apply in an allocation round

Rounds have been annual since Allocation Round 5. Each has an application window set by notice; the Allocation Round 8 window ran from 20 July to 7 August 2026.