Description from the National Audit Office (NAO):
In September 2017, the Department for Business, Energy & Industrial Strategy (the Department) awarded through an auction 11 Contracts for Difference (CfDs) to low-carbon electricity generation projects. CfDs fix the price that generators receive for the electricity they generate for a set period, typically 15 years. Consumer-funded top-up payments make up the difference between the fixed price in the contract, known as the ‘strike price’, and the prevailing market price. The 2017 auction resulted in lower costs for new offshore wind farms than the government expected. This continued the recent trajectory of reductions in the costs of this technology. The government has awarded more than 40 CfDs since 2014, mostly through auctions.