The Contracts for Difference (Sustainable Industry Rewards) Regulations 2024 are designed to promote the adoption of sustainable practices among industries by providing financial incentives through contracts for difference. This mechanism ensures that companies receive payments when the market prices are below a set "strike price" and pay back the difference when the prices are above it. This approach aims to stabilise revenue for businesses investing in sustainable technologies, thus encouraging more consistent investment in environmentally friendly practices.
The Regulations introduce the Sustainable Industry Rewards (SIRs), formerly known as non-price factors (NPFs), into the Contracts for Difference (CfD) scheme, the UK’s main renewable energy support scheme. This will be a temporary replacement for CfD Supply Chain Plans (SCPs) for offshore and floating offshore wind for CfD Allocation Rounds 7, 8 and 9 only. CfD Allocation Rounds run on an annual basis, with AR7 scheduled for 2025.
Overall, these regulations aim to provide a secure financial environment for businesses to invest heavily in sustainable practices, reducing the economic uncertainty often associated with such ventures and supporting the broader transition to a low-carbon economy.
