Renewable Energy Subsidies UK: CfDs, ROCs & FiTs

What this document is

A renewable energy subsidy agreement is, broadly, a contractual or regulatory mechanism that tops up or stabilises the income a generator earns from producing low-carbon electricity. The point is to bridge the gap between the market price of electricity and the revenue a project needs to be financially viable, particularly during the payback period for construction costs.

In the UK, these arrangements are usually backed by statute and delivered through government-owned bodies or licensed suppliers, rather than direct grants from the Treasury. The most prominent current scheme is the Contracts for Difference (CfD) regime, where generators bid into competitive allocation rounds for long-term price stabilisation contracts.

Older schemes, such as the Renewables Obligation and Feed-in Tariffs, are now closed to new entrants in most cases but continue to pay out to accredited projects already in the system. Each mechanism has its own eligibility rules, accreditation steps and ongoing compliance obligations, and the choice between them (where a choice still exists) depends on project scale, technology and timing.

How to use this document

1. Work out which scheme your project actually qualifies for. The Renewables Obligation and Feed-in Tariffs are closed to most new applicants, so in practice new utility-scale projects are generally looking at the CfD regime. Smaller installations may fall under the Smart Export Guarantee instead. Confirm eligibility against current scheme rules before committing to a route.
2. Assess the commercial fit before you bid or apply. Subsidy agreements bring obligations as well as income. A CfD, for example, locks you into a strike price for 15 years, which may look generous today and tight tomorrow. Model your project under a range of wholesale price scenarios, factoring in indexation, curtailment risk and inflation, before you commit.
3. Prepare the supporting evidence and accreditation material. Whether you're applying for a CfD allocation round or registering a project under an existing scheme, you'll typically need planning consent, grid connection evidence, technology specifications and corporate information. Gaps here can cost you a whole allocation window, so build a checklist early.
4. Understand your metering, reporting and compliance duties. Subsidy income almost always depends on accurate, independently verified generation data. Make sure metering arrangements meet scheme requirements, appoint a meter operator where needed, and put internal processes in place for the regular reporting cycle. Missed submissions can delay or reduce payments.
5. Plan for the end of the support period. Every subsidy has a cliff edge. When the CfD term runs out, or when accreditation under an older scheme ends, revenue reverts to pure merchant exposure. Build a post-subsidy strategy, whether that's a power purchase agreement, a repowering project, or a route-to-market contract, well before the support period closes.

Common questions