EMR Delivery Body Contract for Difference – March 2017.

EMR Delivery Body Contract for Difference – March 2017

Agenda About the Allocation Process CfD Systems Future Engagement
Allocation Process Overview System Registration Application Submission Pre-Validation Checks Qualification Assessment Allocation Overview Round 2 Key Features Valuation Sealed Bid Rules Auction Scenarios CfD Systems Future Engagement

The team… Anna Holleron Charlotte Watts Paul Mullen Nisar Ahmed
EMR Analyst Anna Holleron Charlotte Watts EMR Delivery Manager Paul Mullen Senior EMR Analyst Nisar Ahmed Ben Smith Mark Baker CfD Manager Yasharn Smith Arjun Mukkara

About the Allocation Process

Allocation Process Overview
Registration & Pre-Application Application & Qualification Allocation & Notification 1 1 1 Applicants Register Apply Request Review Request Appeal Submit Sealed Bids Sign Contract Supply Chain approval Round Variation / Budget Revision Notices Qualified Applicants Run Auction & Allocate Assess Eligibility Register Applicants Review Appeal RO Check Minor & Necessary Agreement Contract Management

System Registration Why: Application is being made with consent from an Authorised Person Use Company Headed Paper Signed and Dated by Authorised Person Company Details and Company number must match exactly Don’t edit or delete sections of registration form Registered Company = Applicant Register before the Application window opens – (9am on 3 April) Guidance available

Application Submission
April 2017 Application Window Applicants can create, save, submit, withdraw and re-submit applications 3, April 2017 (9am) Application Window opens 21, April (5pm) Application Window closes Only submitted applications will be taken forward to qualification assessment

Pre-Validation Checks
Why: To help Applicants Submit Applications Right 1st Time When: 9am on 3 April to 5pm on 21 April (on a reasonable endeavours basis if after 5pm on 19 April) What: Sense check of Application Submitted (not an assessment) What: Respond Back in 48 hours Full process to be communicated on portal before Application Window Opens

Key Qualification Criteria
Connection Agreement/Countersigned Offer/Signed Offer Acceptance Planning Decision Notice Supply Chain Approval Certificate if >=300MW Declarations that not in receipt of other subsidies Evidence of Incorporation Target Commissioning Date within Target Commissioning Window Crown Estate Agreement to Lease/Lease if Offshore Offshore capacity requirements Application Form to include technology, contact details, location, capacity and target dates

Connection Agreement - Direct Connection
Directly Connected Direct Connection All output to transmission/ distribution system Applicants Required to upload: Signed Agreement/Offer acceptance between Generator and Owner of Transmission/ Distribution system Locational and technology consistency checks Transmission Entry Capacity/Capacity >=75% capacity applied for Connection Date in Connection Agreement <= Target Commissioning Date applied for checks Note: Mandatory to have a signed Connection Agreement otherwise the application would FAIL

Connection Agreement – Partial Connection
Applicants Required to upload: Private Network Use Agreement (where Generator not operator of Private Network)* Signed Agreement/Offer acceptance between Generator and Owner of Transmission/Distribution system Locational and technology consistency checks Partial Connection checks Output to transmission/ distribution system and private wire network Note: Mandatory to have a signed Connection Agreement otherwise the application would FAIL * Generator and Operator of Private Network can be same entity

Connection Agreement - Islanded CFD Unit
Applicants Required to upload: Private Network Use Agreement (where Generator not operator of Private Network)* Locational and technology consistency checks Islanded CFD Unit checks Output to private wire network only Note: Mandatory to have a signed Connection Agreement otherwise the application would FAIL * Generator and Operator of Private Network can be same entity

Connection Agreement – Evidence Requirements
Acceptable Evidence Countersigned agreement with Transmission System Operator Distribution Offer signed by Distribution Network Operator (DNO) and Generator’s signed offer acceptance Evidence of Distribution Offer from DNO and Generator’s signed offer acceptance What isn’t acceptable evidence Unsigned Distribution Offer acceptance by Generator No evidence of Distribution Offer from DNO

Planning Decision Notice
As part of normal project construction and operation, a generation project may require a number of different planning consents both for the generation facility and to connect to a Transmission or Distribution Network. Only some specific types of consents are relevant for CFD Qualification which are known as the ‘Applicable Planning Consents’. Section 36 Transport Works Act Order * Marine Licence Planning Permission Development Order For each of these, Applicants will need to confirm if this is one of their Applicable Planning Consents and if so provide a signed and dated Planning Decision Notice, if not provide a reason why this does not apply. *If CFD Unit is located in Wales and technology is Offshore Wind

Planning Decision Notice
Applicants Planning Decision Notice for each Applicable Planning Consent that applies *If expiry date is prior to date of CfD Application, provide appropriately signed and dated supporting evidence to clarify that such expiry date is extended to date after date of CfD Application Delivery Body Location & technology consistency checks MW in planning decision notice >= capacity applied for? Planning Decision Notice has not expired at time of application?*

Planning Decision Notice – Evidence Requirements
Acceptable Evidence What isn’t acceptable evidence Planning Decision Notice Planning committee meeting minutes Outline Planning Permission

Thank You & Questions

EMR Delivery Body Allocation Overview

Pre-Application Activities
Allocation Timeline Applicants Submit Sealed Bids Run Auction & Allocate Contract Management Sign Contract Pre-Application Activities and Registration Application & Qualification Allocation & Notification Apply Assess Eligibility Request Review Review Request Appeal Appeal Round Variation / Budget Revision Notices Qualified Applicants RO Check Register Supply Chain approval Minor & Necessary Agreement

Key Allocation dates – Earliest
Valuation Window Invitation to Sealed Bids Window Sealed bid window - 5 working days Run Auction / Audit process – Max 12 working days Auction Results to BEIS/ Sec of State – 2 working days Release of Auction Results to Applicants 16th May 24th May 25th May 2nd June 19th June 22nd June Please see the implementation plan for a range of different timeline scenarios

EMR Delivery Body Key features of CFD Round 2

Key features of CFD Round 2
Pay as cleared Auction 2 Delivery Years (2 Valuation years) 1 Pot (Maxima Technologies within) Bids – up to 2 per delivery year (4 in total) Interleaving (Applicable to Flexible Bids across Delivery Years) Auction Round 2: Key Auction Features

EMR Delivery Body Valuation

Technology Specific Factors General Conversion Factors
Valuation The Delivery Body uses a Valuation Formula to calculate the Budget Impact of each Qualifying Application. The variables used in this formula are published in the Round specific Allocation Framework and the same calculation is used for Sealed Bids should an Auction be required. Budget Impact is what a Successfully Qualifying Application will cost in subsidies over the next 15 years. Administrative Strike Price minus Reference Price Capacity Technology Specific Factors General Conversion Factors X X X ASP: Maximum Strike Price (£/MWh) that applies to an Application. Reference Price: Market Electricity Price (£/MWh) in a given time period MW value provided by Applicants i.e. Load Factors and other multipliers (see Round specific Allocation Framework for full details) i.e. Transmission Losses, hours to days etc. (see Round specific Allocation Framework for full details)

BUDGET IMPACT CALCULATION
ASP (2012) £/MWh RP £/MWh LOAD FACTORS DAYS TLM RQM CHPQM 2021/22 125 39.86 83.2% 365 0.79% 0.5 1 2022/23 115 42.6 2023/24 - 47.68 366 2024/25 52.29 125 125 125 125 39.86 83.2% 365 0.79% 0.5 1 42.6 83.2% 365 0.79% 0.5 1 Application 1 Technology: ACT Capacity: 20MW TCD: 47.68 83.2% 366 0.79% 0.5 1 52.29 83.2% 365 0.79% 0.5 1 Y1F = 1- (NO.OF DAYS TO TCD/ TOTAL NO.OF DAYS) Y1F = 1- (255/365) = Budget Impact 2021/22 = ( 125 Strike Price - 39.86 Reference Price ) X 0.832 Load Factor X YR1F X 20 Capacity X ( 365 Days X 24 ) X ( 1 - TLM 0.0079 ) X RQM 0.5 X CHPQM 1 = £1,855,309.42 Budget Impact 2022/23 = ( Strike Price 125 - 42.6 Reference Price ) X 0.832 Load Factor X 1 YR1F X Capacity 20 X ( Days 365 X 24 ) X ( 1 - 0.0079 TLM ) X 0.5 RQM X CHPQM 1 = £5,958,131.63 Budget Impact 2023/24 = ( 125 Strike Price - 47.68 Reference Price ) X Load Factor 0.832 X 1 YR1F X Capacity 20 X ( 365 Days X 24 ) X ( 1 - TLM 0.0079 ) X 0.5 RQM X 1 CHPQM = £5,606,127.21 Budget Impact 2024/25 = ( Strike Price 125 - 52.29 Reference Price ) X Load Factor 0.832 X 1 YR1F X 20 Capacity X ( 365 Days X 24 ) X ( 1 - 0.0079 TLM ) X 0.5 RQM X CHPQM 1 = £5,257,472.71

BUDGET IMPACT CALCULATION
Offshore Wind ASP (2012) £/MWh RP £/MWh LOAD FACTORS DAYS TLM RQM CHPQM 2021/22 105 39.86 47.7% 365 0.79% 1 2022/23 100 42.6 2023/24 - 47.68 366 2024/25 52.29 100 100 100 100 100 100 42.6 47.7% 365 0.79% 1 1 Application 2 - P1 Technology : Offshore Wind Capacity: 100MW TCD: Application 2 – P2 Technology : Offshore Wind Capacity: 50MW TCD: Application 2 – P3 Technology : Offshore Wind Capacity: 50MW TCD: 47.68 47.68 47.7% 47.7% 366 366 0.79% 0.79% 1 1 1 1 52.29 52.29 52.29 47.7% 47.7% 47.7% 365 365 365 0.79% 0.79% 0.79% 1 1 1 1 1 1 Budget Impact 2022/23 = ( Strike Price 100 - 42.6 Reference Price ) X Load Factor 0.477 X YR1F X Capacity 100 X ( Days 365 X 24 ) X ( 1 - TLM 0.0079 ) X 1 RQM X CHPQM 1 = £1,499,425.18 Budget Impact 2023/24 – P1 Budget Impact 2023/24 – P1 & P2 = £23,531,412.21 ( Strike Price 100 + - Reference Price 47.68 ) X Load Factor 0.477 X YR1F 1 X Capacity 100 X ( Days 366 X 24 ) X ( 1 - TLM 0.0079 ) X 1 RQM X 1 CHPQM = £21,748,729.47 Budget Impact 2024/25 – P1,P2&P3 Budget Impact 2024/25 – P1 & P2 Budget Impact 2023/24 – P2 Budget Impact 2024/25 – P1 = = £39,556,453.48 ( ( Strike Price 100 100 Strike Price + - - 47.68 52.29 Reference Price Reference Price + ) ) X X 0.477 0.477 Load Factor Load Factor X X 1 YR1F YR1F X X 100 Capacity Capacity 50 X X ( ( 365 Days 366 Days X X 24 24 ) ) X X ( ( 1 1 - - TLM TLM 0.0079 0.0079 ) ) X X RQM 1 1 RQM X X CHPQM 1 CHPQM 1 = = £19,778,226.74 £1,782,682.74 Budget Impact 2024/25 – P2 Budget Impact 2024/25 – P3 = = ( ( Strike Price Strike Price 100 100 - - 52.29 52.29 Reference Price Reference Price ) ) X X Load Factor 0.477 0.477 Load Factor X X YR1F 1 1 YR1F X X 50 50 Capacity Capacity X X ( ( 365 Days Days 365 X X 24 24 ) ) X X ( ( 1 1 - - TLM 0.0079 0.0079 TLM ) ) X X RQM 1 1 RQM X X 1 1 CHPQM CHPQM = = £9,889,113.37 £9,889,113.37

EMR Delivery Body Sealed Bid Rules

Sealed Bids Strike Price TCW TCD Capacity
Sealed Bids must be submitted during the submission window using the EMR Delivery Body Portal – we will run a webinar with the relevant applicants following qualification results At this point applicants will be able to enter (for each sealed bid) a different: If no seal bid is entered (or all sealed bids are withdrawn) the ASP will assigned to the application (TCD and TCW will stay as per the original application) Each Sealed Bid must: be submitted in 2012 prices (pounds sterling) Must be to the nearest whole pence for the lowest bid in each delivery year (the Flexible bid can be to the tenth of a penny) not exceed the relevant ASP Not exceed the capacity of the original application (can only be equal to or less) Strike Price TCW TCD Capacity

Projects will be awarded in order of lowest to highest Strike Price
During the Auction All projects will compete on Strike Price basis, regardless of Delivery Year Projects will be awarded in order of lowest to highest Strike Price Projects that are exactly tied on the same Strike Price Bid will be handled by the Tiebreaker Rules set out in the Round specific Allocation Framework Projects will be paid the Pot Clearing Price set by the most expensive successful project in each Delivery Year (subject to any cap at the Technology specific Administrative Strike price and/or subject to any Maxima Rules).

EMR Delivery Body Bid Stack

What are we going to cover
Sealed Bids Bids caped at ASP / not submitting a sealed bid Impact on budget - both maxi and general Closing delivery years Flexible bids across delivery years How the Maxi pot fits into the general auction Interleaving process

BID STACK A1 A2 A3 A4 D1 D2 D3 D4 F1 C2 D3 A1 D4 A3 B1 B2 E1 E2 C1 A4
( ) A2 60.42 ( ) A3 ( ) A4 70.34 ( ) D1 50.23 ( ) D2 ( ) D3 ( ) D4 ( ) F1 ( ) C2 ( ) D3 ( ) A1 ( ) D4 ( ) A3 ( ) B1 40.00 ( ) B2 ( ) E1 ( ) E2 55.32 ( ) C1 73.22 ( ) A4 70.34 ( ) E1 ( ) D2 ( ) C1 73.22 ( ) C2 ( ) F1 ( ) A2 60.42 ( ) B2 ( ) E2 55.32 ( ) D1 50.23 ( ) B1 40.00 ( )

EMR Delivery Body General Auction – Basic Overview

GENERAL POT AUCTION      E2 D1 B1 B1 C2 C1 D3 A2 A2 A1 E2 D4 E2
DY1 2021/22 DY2 2022/23 £50,000,000 DY1 2021/22 DY2 2022/23 £100,000,000 £150,000,000 £200,000,000 £250,000,000 £300,000,000 £290,000,000 VY1 2023/24 VY2 2024/25 C2 ( ) C1 D3 ( ) A2 B1 D1 E2 A2 A1 ( ) D4 ( ) B1 D1 E2 E2 A3 ( ) B1 D1 C1 73.22 ( ) D1 B1 A4 70.34 ( ) E1 ( ) D2 ( )  A2 60.42 ( )  B2 ( ) E2 73.22   E2 55.32 ( ) D1 60.42 B1 70.00 (ASP) B1 55.32  D1 50.23 ( ) B1 40.00 ( )

EMR Delivery Body General Auction – Delivery Year Closure

GENERAL POT AUCTION DY CLOSURE
2021/22 DY2 2022/23 G1 ( ) £50,000,000 DY1 2021/22 DY2 2022/23 £100,000,000 £150,000,000 £200,000,000 £250,000,000 £300,000,000 VY1 2023/24 VY2 2024/25 C2 ( ) £290,000,000 G1 F1 A2 B1 D1 E2 D3 ( ) A2 B1 D1 E2 A1 ( ) A2 D4 ( ) Delivery Year Closed  A3 ( ) B1 D1 E2 E2 C1 73.22 ( ) Delivery Year Closed B1 D1 D1 F1 72.00 ( ) B1 A4 70.34 ( ) E1 ( ) D2 ( )   A2 60.42 ( )  B2 ( ) E2 55.32 ( ) D1 60.42  B1 55.32  D1 50.23 ( ) B1 40.00 ( )

EMR Delivery Body General Auction – with Maxima

GENERAL POT AND MAXIMA AUCTION.
DY1 2021/22 DY2 2022/23 G1 ( ) £50,000,000 DY1 2021/22 DY2 2022/23 £100,000,000 £150,000,000 £200,000,000 £250,000,000 £300,000,000 VY1 2023/24 VY2 2024/25 F2 [M] ( ) £290,000,000 G1 K1 B1 D1 E2 A1 C1 I1 J1 H1 Delivery Year Closed Delivery Year Closed H1  K1 ( ) B1 D1 E2 A1 C1 I1 J1 J1 B1 D1 E2 A1 C1 I1 I1 H1 [M] ( ) B1 D1 E2 A1 C1 C1  J1 ( ) B1 D1 E2 A1 I1 ( ) A1  E2  C1 [M] 73.22 ( ) I1 80.121  F1 [M] 72.00 ( ) D1  H2 [M] 70.34 ( ) B1  E1 ( ) D2 ( )  Capacity Pot 80MW 20MW 40MW 60MW 100MW 120MW 150MW 140MW A1 [M] 80.121  A1 [M] 60.42 ( ) H2 F1 H1 E2 73.22 E2 77.754  B2 [M] ( ) C1 D1 60.42 E2 55.32 ( ) A1 D1 75.323 D1 80.121  B1 [M] 73.22  D1 50.23 ( ) B1 B1 [M] 40.00 ( )

EMR Delivery Body General Auction – with Interleaving

INTERLEAVING   Delivery Year Closed    Interleaving Loop    
DY1 2021/22 DY2 2022/23 G1 ( ) £50,000,000 DY1 2021/22 DY2 2022/23 £100,000,000 £150,000,000 £200,000,000 £250,000,000 £300,000,000 VY1 2023/24 VY2 2024/25  F2 [M] ( ) £290,000,000 D1 K2 K1 C1 B1 E1 A1 D2 I1 H1 H1 F2 J1 82.7 ( ) J1 B1 E1 A1 D2 C1 K2 C1 B1 E1 A1 D2 I1 J1 84.123  I1 J1 B1 E1 A1 D2 C1 K2 K2 K2 80.458( ) K2 80.458( ) K2 82.7 K2 84.123   C1 B1 E1 A1 D2 B1 E1 A1 D2 C1 Delivery Year Closed C1  H1 [M] ( ) B1 E1 A1 D2 D2 I1 80.121  I1 ( ) Interleaving Loop A1 C1 [M] 84.123  C1 [M] 73.22 ( ) C1 [M] 73.22 ( ) E1  F1 [M] 72.00 ( )  H2 [M] 70.34( ) H2 [M] 70.34 ( ) B1  K1 ( ) D2 75.323 D2 80.121  D2 ( ) Capacity Pot 80MW 20MW 40MW 60MW 100MW 120MW 150MW 140MW A1 [M] 80.121 Interleaving Loop  A1 [M] 60.42 ( ) H2 F1 F2 H1 E1 73.22 B2 [M] ( ) E1 80.458 E1 84.123 E1 82.7  C1  E1 55.32 ( ) A1 B1 [M] 84.123 B1 [M] 73.22  D1 50.23 ( ) B1 B1 [M] 40.00 ( )

CFD Systems

Systems Update Web Based System Validation to support Applicants
Compatible with IE and Firefox Not compatible with Apple Mac - please contact us No restrictions on file formats but must be <= 2MB Can upload zip files Validation to support Applicants 2 Factor Authentication process

Future Engagement

Further 1-2-1’s can be arranged – 23 or 24 March
Next Steps Further 1-2-1’s can be arranged – 23 or 24 March Sealed Bids Webinar Updated Guidance

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EMR Delivery Body Contract for Difference – March 2017.

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