Contracts for Difference 21 st January 2015 Implementation Update.
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Transcript of Contracts for Difference 21 st January 2015 Implementation Update.
Contracts for Difference
21st January 2015
Implementation Update
Welcome, Agenda and Safety
2
Agenda
CfD Contract Signing Process
CfD Allocation Overview
Sealed Bids Rules & Form Demo
CfD Round 1 Progress and Timeline
Applicant Processes (Submit & Withdrawals)
Q&A & Close
121 discussions
CfD Contract Management
LCCC Key Contacts
Contracts for Difference
John PerkinsCfD Manager
Round 1 Progress and Timeline
5
ApplicantsApply
Assess Eligibility
Request Review
Review
Request Appeal
Appeal
Round Variation / Budget Revision Notices
Qualified Applicants
RO Check
5.
Appeal6. Valuation 7. Sealed
Bids
8. Allocation &
Independent Audit
9. Allocation Notification
1. Pre-Application Activities
2. Application 3. Qualification 4. Review
6
Applicants
Round Variation / Budget Revision Notices
Submit Sealed bids if requested
Value qualified applicants
Allocation & Independent Audit
Request sealed bids if required
5.
Appeal6. Valuation 7. Sealed
Bids
8. Allocation &
Independent Audit
9. Allocation Notification
1. Pre-Application Activities
2. Application 3. Qualification 4. Review
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
7
8
Applicants
Allocation Reports Review
CfD Notification
Issue Contracts
Contract Signature
5.
Appeal6. Valuation 7. Sealed
Bids
8. Allocation &
Independent Audit
9. Allocation Notification
1. Pre-Application Activities
2. Application 3. Qualification 4. Review
CfD Register
Appeals Register
Expected Key Dates
Process Step Date
DB Notice to SOS 20-JanSOS Budget Review 21-27 Jan
Auction Notice 28-JanSealed Bid Submission 29 Jan - 4 Feb
Allocation 5-20 FebSOS review 23 & 24 Feb
CFD Notification 26 FebLCCC prepare Contracts 27 Feb - 12 Mar
Contract Signature 13-27 Mar
10
National Grid Contact Details
' Phone: 01926 655300 (calls recorded on this number)
* Email: [email protected]
website: www.emrdeliverybody.com
Contracts for Difference
Yasharn SmithEMR Delivery Manager
Allocation Rules
CfD – Competitive Allocation Principles
12
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 BudgetMinimum allocated first
Allocation in ascending price order (across years)
Years can close independently
When is an Auction Required Illustration only
13
AUCTION REQUIRED
NO AUCTION REQUIRED
Budget Notice
£m 11/12 prices 15/16 16/17 17/18 18/19 19/20 20/21
Pot 1 (established) 50 65 65 65 65 65
Pot 2 (less established) 0 155 235 235 235 235
Pot 3 (biomass) 0 0 0 0 0 0
Total 50 220 300 300 300 300
Maximum amounts consumers would be expected to fund in each year
Conversion factor to translate budget to 2012 prices : 1.0195
CfD Allocation – General PrinciplesBudget 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).
CfD Allocation – Flexible BidsProject SP Bid Del Yr MW
A2 115 16/17 43
K1 113 18/19 700
G3 112 18/19 5
C2 108 17/18 28
A1 105 15/16 47
C1 105 17/18 38
D6 97 16/17 42
D1 94 16/17 80
H4 93 17/18 35
B2 92 16/17 50
F2 90 17/18 80
E1 88 16/17 63
B7 85 15/16 50
Fle
xib
le B
ids
- In
cre
as
ing
Pri
ce
15/16 16/17 17/18 18/19
B7
Str
ike
Pri
ce
Bid
s
B2
D1
D6
A1
A2
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
E1
G3
Close Year
Reject all other bids for 16/17
Budget would be exceeded in 16/17
Next cheapest bid is for
same project
F2
H4
Close Year
C1
C 2
K1
Close Year
Tiebreak with A1 & C1
A1 uses budget best in final year
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
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
Confirm projects with same S.P would exceed budget
Consider other flex bids for unsuccessful projects
Remove other flex bids for successful projects
Contracts for Difference
Giampaolo PanizioEMR CfD - Commercial Analyst
Sealed Bids
Sealed Bids – Relevant Material
Sealed Bid Submission User Guide is available
on the Delivery Body Portal
https://www.emrdeliverybody.com/Pages/AnnouncementDescription.aspx?CID=98
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. £100.011)
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
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
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: 80.00 MW
• ASP: £95 per MWh
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
Contracts for Difference
Yasharn SmithEMR Delivery Manager
Applicant Processes
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
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
Auction Notice
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
Submission through Egress
Applicants must send filled in (validated) sealed bids form/withdrawal forms to the Delivery Body through Egress Switch: https://secureform.egress.com/emr/
Applicant contact details required here
DB will not accept Sealed Bid forms from unregistered person
Submission through Egress
Upload file to be sent here
1. Select CFD Sealed Bids on the [Type of Submission] drop down box;
2. Click on the Add Files button;
3. A file dialog box will appear which enables
4. Users to select their files, upload Validated Sealed B
Applicants must not change the file name of the pre-populated Sealed Bid form sent from the DB
Enter an alternative email address if required for copies of submission to be shared
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
31
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.
32
33
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:
1. preparation of CFD and arranging execution
2. 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
Contract Management Tasks
Today’s Agenda
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What Does Success Look Like
1) Win the offer of a CfD Contract in the auction
2) If you get past 1 then you must
3) Sign a Contract by 27 March
4) 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
35
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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.
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End of Auction to Contract SigningAction 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
Within 10 Working Days (Regs)
Working Day (Regs) = Weekdays – Bank Holidays in any part of the UK
37
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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
38
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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!
39
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How the process works in more detail
WorkingDays (Regs) Counter
Typical date
Time Obligation Action
0 Thur26 Feb
Before 5pm
Process initiated N Grid provide data to Low Carbon Contracts Company
10, and initiates new counter
Thur12 Mar
Before 5pm
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 Fri27 Mar
5pm 1 copy of Contract must arrive at Fleetbank House
Scanned via Egress e mail and/or deliver paper copies.
40
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What you will receiveThe CFD agreement + 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,
41
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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
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Agenda
• Introduction
• Notification to Contract Signing
• Initial Conditions Precedent and Beyond
43
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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
44
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Extreme Compass Co-ordinates
Extreme co-ordinates – WGS84 Latitude LongitudeNortherly 53.385943 -3.421383Easterly 53.359055 -3.414001Southerly 53.350056 -3.421000Westerly 53.385000 -3.431000
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 questionsBut will not provide Contract explanation Applicants need to access legal advice
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Early preparation
1. Check Egress works for all key parties• Send e mail to [email protected] 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 [email protected] 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 www.lowcarboncontracts.uk
• Visit our web site or contact the team for more information
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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.
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Contracts for Difference
John PerkinsCfD Manager
Closing Remarks and Questions
52
National Grid Contact Details
' Phone: 01926 655300 (calls recorded on this number)
* Email: [email protected]
website: www.emrdeliverybody.com