Finance Jason Deign - 26/May/2023

A contract makes all the difference

Finding the most efficient way to pay for the energy transition is not an easy affair—but lawmakers worldwide seem to be increasingly converging on contracts for difference as the mechanism of choice to fund emerging technologies

Contracts for difference have supported the growth of offshore wind in the UK and are now gaining traction elsewhere

SUBSIDY CHALLENGES Market support mechanisms such as feed-in tariffs have had a patchy record with renewables in Europe

CONTRACTUAL CONFIDENCE The contracts for difference model allows governments to share risk with private investors

KEY QUOTE It is cheaper to do a contract for difference that might or might not pay out, than a subsidy that will definitely pay out ...


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