The Department for Energy Security and Net Zero (DESNZ) was established in February 2023 and is focused on the energy portfolio from the former Department for Business, Energy and Industrial Strategy (BEIS).
DESNZ is responsible for:
•Delivery security of energy supply
•Ensuring properly functioning energy markets
•Encouraging greater energy efficiency
•Seizing the opportunities of net zero to lead the world in new green industries
BEIS (the predecessor department) set up the Contracts for Difference (CfD) scheme in 2014 as part of Electricity Market Reform (EMR), which was designed to promote investment in secure and low-carbon electricity generation while improving affordability for consumers.
DESNZ’s main role in the CfD scheme is in setting the policy framework and deciding the rules and timings for each new allocation round. This includes:
•Running public consultations on major changes
•Confirming which technologies and types of projects are eligible for auctions
•Publishing the timings for each round, including when the round will open
•Publishing the allocation framework, which states the rules for operating the auction
•Setting the overall budget available in auctions
•Setting the administrative strike prices for technologies – these are a cap on the level of support available to each technology
•Defining the standard conditions of new contracts
•Setting the policy and publishing guidance for supply chain plans
DESNZ is not involved in the actual running of the auction or in the signing and management of the contracts with projects that are successful in each allocation round. These parts of the process are managed by National Grid ESO (EMR Delivery Body), Ofgem and the Low Carbon Contracts Company, respectively.