Energy and Climate Change written question – answered on 25th June 2014.

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Photo of Alan Whitehead Alan Whitehead Labour, Southampton, Test

To ask the Secretary of State for Energy and Climate Change whether independent generators who sign a conditional power purchase agreement ahead of competing in a Contract for Difference auction will be able to participate in a later short-term power purchase market that the offtaker of last resort arrangements seek to support.

Photo of Michael Fallon Michael Fallon The Minister of State, Department for Business, Innovation and Skills , Minister of State, Department of Energy and Climate Change, Minister of State for Portsmouth

We anticipate that some generators will seek to establish the terms of any PPA and financing arrangements before they participate in the CfD allocation round, in order to understand better their likely costs. Agreements between generators and PPA providers could take a number of different forms, from indicative terms to a signed contract. The decision to sign a conditional PPA ahead of the auction, and the duration of any agreement, are ultimately commercial matters.

We anticipate that the Offtaker of Last Resort (OLR) will encourage competition in the PPA market both at the outset of the CfD and once any initial PPA has expired. Generators agreeing to a conditional PPA would be able to participate in the later short-term PPA market, once their initial PPA had expired; backed by the protections afforded by the OLR.

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