What is Contract For Difference (CfD)?

Contract for Difference (CfD) is a long term contract between an electricity generator and the Low Carbon Contracts Company (LCCC). Through the contract the electricity generators receive a fixed price for low carbon power generation to help incentivise and provide certainty for investment in new lower carbon or carbon-free power generation technologies. Under the CfD scheme, payment scan flow from the LCCC to the power generator when the Strike Price is higher than the market price. When the Strike Price is below the market price, the power generator pays the LCCC the difference.

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What is Contract For Difference (CfD)?