1. Contracts For Difference Implementation Coordination

2. 2

3. 3 Agenda 21 st July 2014 09:30 - 10:00Introduction & Measures of Success 10:00 - 10:25CfD Allocation Process Overview 10:25 – 11:10Systems Overview 11:10 – 11:25Coffee 11:25 – 12:00User Registration 12:00 – 12:50Application, Qualification & Disputes 12:50 – 13:30Lunch 13:30 – 13:50CfD Valuation 13:50 – 15:00Allocation, Audit and CfD Notification 15:00 – 15:20Coffee 15:20 – 16:00Implementation Next Steps & Q&A

4. Implementation Coordination Aims 4  Enable readiness to participate in the CfD  Engage with delivery partners  Agree measures of success  Develop and maintain implementation issues log  Communicate policy related issues to DECC

5. The Team 5  John Perkins (CfD Manager)  Paul Mullen  Yasharn Smith  Nisar Ahmed  Giampaolo Panizio  Ian Woolley (EMR I.S. Manager)  James Greenhalgh (EMR Stakeholder Manager)

6. Engagement 6  Why?  Understand what implementation planning you need to do to be ready to participate.  Develop internal capabilities and processes to ensure readiness  How?  Engage in the process to ensure successful delivery  Today and future I.C events  August (with LCCC)  Sept (with LCCC)  Oct (With LCCC)  Bilateral meetings

7. Measures of Success 7  CfD Implementation Success  What does successful implementation look like?  I.T. systems available in time  maximum participation in allocation  Positive allocation outcome

8. Measures of Success 8  On Your tables please discuss the subject:  What does successful CfD Implementation look like?  Appoint a scribe and someone to feedback to the room  10 mins group discussion  10 mins feedback

9. Delivery Partners Setting Legislation & Energy Policy Signing and ongoing management of CfD contracts Regulates Market (inc EMR) Delivery Body EMR Settlement Agent

10. JunJulAugSepOct 2014 Secondary Legislation and license changes come into force Submit supply chain plans Initial CfD Budget Published Final Supply Chain Guidance AF Publication & Regs laid Contracts Minor & Necessary change request DB Publish Round Guideline Latest date for Budget Notice, Allocation Round Notice and Framework Notice Application Round Start Timeline leading up to first Allocation Round

11. CfD Overview

12. CfD Legislative Update Energy Act 2013 CfD (Definition of Eligible Generator) Regulations CfD (Allocation) Regulations Allocation Framework Budget Notice Allocation Round Notice Framework Notice CfD(Electricity Supplier Obligations) Regulations CfD (Standard Terms) Regulations EMR(General) Regulations SOS Direction Regulations (not currently laid) Offtaker of Last Resort Regulations (not currently laid) EU State Aid Approval

13. Key Round Documents (1) Allocation Process Valuation Methodology Allocation Framework Start and End Dates Application Closing Date Delivery Year(s) Any Technology Restrictions Allocation Round Notice

14. Key Round Documents (2) Links an Allocation Framework to an Allocation Round Framework Notice Overall Budget Administrative Strike Prices May set Minima, Maxima and Pot (Sub) budgets Budget Notice

15. CfD Process – End to End 15 5. Appeal6. Valuation 7. Sealed Bids 8. Allocation & Independent Audit 9. Allocation Notification 1. Pre- Application Activities 2. Application 3. Qualification 4. Review

16. 16 ApplicationQualificationReviewAppealValuationSealed Bids Allocation & Independent Audit CFD Notification

17. 17 ApplicationQualificationReviewAppealValuationSealed Bids Allocation & Independent Audit CFD Notification

18. 18 >=300MW submit Supply Chain Plan Minor & necessary change requests Allocation Framework, Allocation Round Notice & Budget Notices Applicants Round Opens Minor & necessary change process Supply Chain Plan Assessment Training, Production of User Guides and Round Guidelines Registration Requests Process Registration Requests 5. Appeal 6. Valuation 7. Sealed Bids 8. Allocation & Independent Audit 9. Allocation Notification 1. Pre- Application Activities 2. Application 3. Qualification 4. Review

19. 19 Applicants Apply Assess Eligibility Request Review Review Request Appeal Appeal Round Variation / Budget Revision Notices Qualified Applicants RO Check 5. Appeal 6. Valuation 7. Sealed Bids 8. Allocation & Independent Audit 9. Allocation Notification 1. Pre- Application Activities 2. Application 3. Qualification 4. Review

20. 20 Applicants Round Variation / Budget Revision Notices Submit Sealed bids if requested Value qualified applicants Allocation & Independent Audit Request sealed bids if required 5. Appeal 6. Valuation 7. Sealed Bids 8. Allocation & Independent Audit 9. Allocation Notification 1. Pre- Application Activities 2. Application 3. Qualification 4. Review

21. 21 Applicants Allocation Reports Review Round Closes CfD Notification Issue Contract s Contract Signature 5. Appeal 6. Valuation 7. Sealed Bids 8. Allocation & Independent Audit 9. Allocation Notification 1. Pre- Application Activities 2. Application 3. Qualification 4. Review

22. CfD Process – End to End 22 5. Appeal6. Valuation 7. Sealed Bids 8. Allocation & Independent Audit 9. Allocation Notification 1. Pre- Application Activities 2. Application 3. Qualification 4. Review

23. Systems

24. 24 Comms Channels Administration System Eligibility Reporting Registry CfD Contracts CMU Obligations Eligibility Documentation Energy Industry & Trade Associations DECC Ofgem Existing Generators Prospective Generators DSR Aggregators Northern Ireland Parties (SONI) External Parties Auction Service Companies & Users User Authentication Authentication Service Public Private Participants (market) Portal Web Alerts & Notifications Secure Email CfD Admin CRM CM Admin Pre- Qualification FAQ & Guidance Appeal Mgmt Appeal Mgmt Allocation Comms & Queries Obligation Tracking Obligation Tracking Round Reporting Auction System Counterparty & Settlement Agent Microsoft Dynamics CRM plus SharePoint Portal Delivered by Wipro Microsoft Dynamics CRM plus SharePoint Portal Delivered by Wipro Power Auctions solution Delivered by IBM Power Auctions solution Delivered by IBM High Level Architecture Reminder

25. Security  Policies  Solutions are designed to comply with National Grid Security Standards and Codes of Practice which are all Government and CPNI approved  Data Centres  All data centres used are ISO 27001/2 standards and SSAE16 Type II certified  Personnel  All National Grid, Wipro and IBM personnel are bound by our security standards and associated background checking  Channels  All National Grid/Participant/Delivery Partner exchanges will be via https secure Internet channels or secure email  Intra-Data Centre communications are via secure VPN  Intrusion Protection  Anti Virus and Malware protection on all servers, Network Security Zones, Edge Network Security, Deep Packet Inspection, Core Firewall Multi Layer Switches  Authentication  User name, password and PIN number required, Maintained via segregated ADFS  PIN authentication through SMS  Password 8 digits, at least 1 upper case, 1 lower case and 1 number or special character, changed every 90 days 25

26. System Requirements  The minimum system requirements for Participant system access 26 DescriptionPortal DownloadsNo executable downloaded code or cookies Supported BrowsersIE 11, 10, 9, 8 Google Chrome (latest version) Mozilla Firefox (latest version plus immediate previous version) Apple Safari (latest released version) Operating SystemsMicrosoft Win7/8 Internet ConnectionFull Internet connection Back-up internet connection recommended Microsoft OfficeMicrosoft Office 2010 or higher recommended * XP is not recommended for security reasons but we will check that screens display correctly in XP. However, if you do choose to use XP, at your own risk, please use Chrome (not IE8) in order to have TLS 1.1

27. Support Process 27 Support Process:Admin&Auction Systems I S S e r v i c e P r o v i d e r I S H e l p D e s k D B C M / C f D T e a m P a r t i c i p a n t & 3 r d P a r t i e s Issue/Query Call Delivery Body Help Desk Resolve Business Issue/Query Business or Technical Issue? Log Call Pass Call to Service Provider Receive Create/ Update Log Resolve Issue Inform DB and Update Heldesk Update User and Update Call Log Confirm Resolution?Start Technical Yes Update Log and Close Call End Call log Closed Contact IS Help Desk Log Call Details Business Issue Not Resolved End Inform Provider Issue Not Resolved Technical Issue Not Resolved Business

28. Service Characteristics 28 DescriptionPortal System Available for use24*7 System Supported Period8am – 6 pm Contact Us Telephone Support8am – 6 pm System Availability ( in supported period )99.9% Recovery Time4 Hours “Hot” Disaster RecoveryYes (Refresh)

29. Testing  Our system will undergo extensive testing to include;  System Testing  All development will be tested before being submitted for UAT  User Acceptance Testing  Full role base testing will undertaken prior to deployment and go-live  Performance Testing  System performance will be tested through use of load simulation tools  Regression/Integration Testing  All code will be tested to ensure integration and end-to-end function  Penetration Testing  Full penetration testing will be undertaken by our accredited testing agent, Portcullis 29

30. Training  System Specific Training will be offered close to launch of the system  Training is not mandatory but encouraged  Registration and Qualification:  User manuals  Training will be modular Webinar style hosted events  Webinar recordings available on-line  A dedicated EMR Helpline will be available to contact the Delivery Body 30

31. Contracts For Difference Coffee Break

32. CfD Process – End to End 32 5. Appeal6. Valuation 7. Sealed Bids 8. Allocation & Independent Audit 9. Allocation Notification 1. Pre- Application Activities 2. Application 3. Qualification 4. Review

33. 33 Comms Channels Administration System Eligibility Reporting Registry CfD Contracts CMU Obligations Eligibility Documentation Energy Industry & Trade Associations DECC Ofgem Existing Generators Prospective Generators DSR Aggregators Northern Ireland Parties (SONI) External Parties Auction Service Companies & Users User Authentication Authentication Service Public Private Participants (market) Portal Web Alerts & Notifications Secure Email CfD Admin CRM CM Admin Pre- Qualification FAQ & Guidance Appeal Mgmt Appeal Mgmt Allocation Comms & Queries Obligation Tracking Obligation Tracking Round Reporting Auction System Counterparty & Settlement Agent Microsoft Dynamics CRM plus SharePoint Portal Delivered by Wipro Microsoft Dynamics CRM plus SharePoint Portal Delivered by Wipro Power Auctions solution Delivered by IBM Power Auctions solution Delivered by IBM High Level Architecture Reminder

34. Portal – Look & Feel 34 Contracts for Difference

35. 35 Registering for CfD Qualification  Ensures individual acting on behalf of an organisation is known, and authorised to do so  High Level Principles  All CfD Qualification Applications will be made through the National Grid “EMR Portal”  All Companies that wish to participate for Contracts for Difference will need to register within this system  Initial company registration through which company details will be cross-checked by National Grid  Thereafter other “company users” of the Portal may be added by the main company administrator user(s)

36. 36 Registering Options  Companies will have three options for initial registration  If you are already registered for the Capacity Mechanism AND you want the same Main Admin for CM and CfD  Your existing registration can be extended to cover CfD  Once the system is live you can register via the system  The process will take two days to enable validation checks  You can register off-line in advance of system go-live via the bulk upload process  You will be able to use the system from go-live day

37. 37 Registering Data Requirements

38. Registration Form – Via the System 38

39. User & Sub-company Registration Company XYZ The Company Administrator for each company will be set up by National Grid on receipt of an authorised request. Including password/PIN re-sets The Company (or Sub-Company) Administrator will typically be a manager within the participant EMR organisation The Company Administrator (or Sub Company Admin) can then assign and manage other users within the company User Password/PIN resets are managed by the Company Administrator

40. Bulk Upload We will provide a bulk upload facility to enable early preparation of Registration and Application data Based upon offline.csv files exchanged via email. National Grid will upload data for validation by participants We will provide templates for; 1.Company and Main Administrator Registration 2.User and Sub-company Registration & Privileges 3.Qualification Data 4.CMU Data We would like all participants to use Template 1 (above) for Company and Main Administrator Registration We expect that use of templates 2 – 4 (above) will only be of value for those with multiple applications/CMUs Documents and files to be submitted must be uploaded manually

41. CfD Process – End to End 41 5. Appeal6. Valuation 7. Sealed Bids 8. Allocation & Independent Audit 9. Allocation Notification 1. Pre- Application Activities 2. Application 3. Qualification 4. Review

42. CfD Qualification 42 To be a qualifying applicant Meet Eligibility Requirements (General, additional & supplemental) Provision of other information/data Not be an Excluded Applicant

43. CfD Qualification – Eligibility Requirements 43 Connection Agreement(s) / Countersigned Offer(s) Supplemental Requirements for phased Offshore projects Supply Chain Plan >=300MW Planning Permission(s)

44. CfD Qualification – Connection Agreements 44 Agreement(s) for connection with TSO and/or /DNO for >=75% of capacity Direct Connection Agreement(s) between Private Wire Generator and Private Wire Network Operator Agreement(s) between Private Wire Network Operator and TSO/DNO Partial Connection Agreement(s) between Private Wire Generator and Private Wire Network Operator Confirmation that no connection agreement applies or is to apply Islanded CFD Unit

45. CfD Qualification – Planning Permissions 45 Permissions must relate to CfD Unit and getting the power to the transmission or distribution or private wire network No requirement to provide permissions for the TO/DNO works Permissions must relate to CfD Unit and getting the power to the transmission or distribution or private wire network No requirement to provide permissions for the TO/DNO works Section 36 Crown Estate Agreement for Lease / Lease (Offshore only) Marine Licence Marine Licence Planning Permission Development Order / Transport and Works Act Order

46. CfD Qualification - Exclusions 46 CCS and Nuclear AD, Hydro, Onshore Wind, Solar =< 5MW Not to be in receipt of another subsidy (RO, CFD, CM, NFFO, RHI if EfW with CHP) except: RO accredited registering additional capacity >=5MW RO accredited registering subsequent offshore phases Biomass co-firing stations can convert from RO to CFD Non GB

47. 47 Evidence of incorporation – e.g. Company Registration and VAT/Tax Registration Valid Incorporation Version number of standard or modified terms Contract terms CfD Qualification – Other Information/Data

48. CfD Qualification – Application process 48 1. Application via system 2. User Registration 3. Upload documents 4. Application submitted 5. System closure

49. CfD Qualification – Eligibility process 49 1. Application Closing Date 2. 10 working days to determine if qualifying application 3. Assess application 4. Verification checks 5. Take into account any contradictory evidence 6. Issue determination to Applicant 7. Notify Applicant via system

50. Applicant Data & Evidence requirements – Planning Permission(s) 50 Planning Permission(s) (including Crown Estate Lease)

51. Applicant Data & Evidence requirements – Connection Agreement(s) 51 Connection Agreement(s) / Countersigned Offer(s)

52. Applicant Data & Evidence requirements 52 Full copy of approval certificate Evidence must clearly state location, MW, dates and technology Supply Chain Plan >=300MW System Validation Supplemental Requirements for phased Offshore Projects Full copy of certificate of incorporation and VAT Registration certificate (or equivalent if non UK) Incorporation

53. Applicant Data and Evidence requirements - Exclusions 53 Certify that not an Excluded Application Certify that not in CM, NFFO or CfD DB cross check against public registers Certify that not in CM, NFFO or CfD DB cross check against public registers Either certify that not in RO, or if certify that in RO confirm which type of dual scheme plant applies DB/Ofgem cross checking process Either certify that not in RO, or if certify that in RO confirm which type of dual scheme plant applies DB/Ofgem cross checking process

54. Other Applicant Data & Evidence 54 Information required for LCCC to complete CfD contract Name and contact details of Applicant/Agent/Person entering into CfD Contract Project specific details e.g. MW, location Certify that information provided in Application is true and correct

55. CfD Process – End to End 55 5. Appeal6. Valuation 7. Sealed Bids 8. Allocation & Independent Audit 9. Allocation Notification 1. Pre- Application Activities 2. Application 3. Qualification 4. Review

56. CfD Qualification – Reviews 56 Applicant Submit Review Notice via system within 5 working days Cover only those areas subject to non qualification determination No new evidence but can clarify original evidence DB 10 working days from date of review notice to reply to Applicant Notify Qualifying Applicants that in receipt of review notices Outcome Non qualification review notice which overturns or upholds original decision and provides reasons for the determination Applicant to log into system and view DB decision

57. CfD Qualification – Reviews 57 Review Requirements Concise statement identifying dispute No new documentary evidence but can clarify original evidence Schedule listing the documents submitted Succinct presentation of arguments Summary of grounds for dispute

58. CfD Process – End to End 58 5. Appeal6. Valuation 7. Sealed Bids 8. Allocation & Independent Audit 9. Allocation Notification 1. Pre- Application Activities 2. Application 3. Qualification 4. Review

59. CfD Qualification – Appeals 59 Applicant Submit Appeal and Review documents to Ofgem directly 5 working days to submit an appeal to Ofgem Ofgem 30 working days to respond Allocation may proceed if overrunning DB Appeal Statement to Ofgem Notify qualifying applicants that there are appeals in progress Update Appeals Register once CfD Notifications have been issued Outcome Can overturn or uphold original decision and provide reasons for the determination Ofgem advise Applicant and DB stating determination and date of determination

60. CfD Qualification – High Court 60 Applicant 28 days to appeal to High Court High Court High Court could ask Authority to reconsider their decision or direct DB to reinstate as a Qualifying Applicant

61. Contracts For Difference Lunch

62. CfD Process – End to End 62 5. Appeal6. Valuation 7. Sealed Bids 8. Allocation & Independent Audit 9. Allocation Notification 1. Pre- Application Activities 2. Application 3. Qualification 4. Review

63. CfD Process – End to End 63 5. Appeal6. Valuation 7. Sealed Bids 8. Allocation & Independent Audit 9. Allocation Notification 1. Pre- Application Activities 2. Application 3. Qualification 4. Review

64. CfD Budget 64 LCF Budget includes Renewables Obligation (RO), Small Scale Feed in Tariff, FIDeR & generic CfD. Levy Control Framework caps for Low Carbon Support Initial budget to be published July 2014, final budget anticipated late September 2014.

65. CfD Allocation – Round 1 Pot 1 - Established Technologies Onshore Wind (>5 MW)Solar Photovoltaic (>5 MW) Energy from Waste with CHP Hydro (>5MW and <50 MW)Landfill GasSewage Gas Pot 2 - Less Established Technologies Offshore WindWaveTidal Stream Advanced Conversion Technologies Anaerobic Digestion Dedicated biomass with CHP Geothermal Potential Pot 3 - Established Technologies Biomass Conversions Scottish island onshore wind projects Potential Pot 4 100MW Minimum across the RO & CfD

66. Valuation Formula Strike Price minus Reference Price e.g. Transmission losses, hours to days. Set out in Allocation Framework e.g. Load factors Set out in Allocation Framework Provided by Applicant X X X

67. 67 CfD Valuation Budget Assessment; by Pot, total value / minima / maxima in each year Budget Assessment; by Pot, total value / minima / maxima in each year Allocation DB Notification to SoS (DECC) SoS (DECC) increase budget?

68. CfD Process – End to End 68 5. Appeal6. Valuation 7. Sealed Bids 8. Allocation & Independent Audit 9. Allocation Notification 1. Pre- Application Activities 2. Application 3. Qualification 4. Review

69. CfD Allocation – Process Overview 69 Step 1 Check if Auction is required. If yes, applicants notified to submit Sealed bids Step 2 Run Unconstrained/Constrained allocation Step 3 Independent Audit of DB Calculations Step 4 SoS reviews; Proceed, Re-run or Cancel Allocation Process. Step 5 DB CfD Notifications : (LCCC & Applicants)

70. CfD – Decisions to run Auction 70 NO Auction MIN Auction MAX (only) Auction General Pot Auction General Pot Auction If… No Pot Breach And… No Breach of Techs subject to MAX (MW)  Techs Subject to MIN can breach (MW) If… No Pot Breach And… No Breach of Techs subject to MAX (MW)  Techs Subject to MIN can breach (MW) If… No Pot Breach And… Techs exceed MAX limit (MW)  Techs Subject to MIN can breach (MW)  All Unallocated MAX Rejected If… No Pot Breach And… Techs exceed MAX limit (MW)  Techs Subject to MIN can breach (MW)  All Unallocated MAX Rejected If… General Pot Breach And… Techs Subject to MIN breach (MW)  Unallocated MINs move to General Pot Auction If… General Pot Breach And… Techs Subject to MIN breach (MW)  Unallocated MINs move to General Pot Auction If… General Pot Breach  Unallocated MINS considered  MAX constraints apply If… General Pot Breach  Unallocated MINS considered  MAX constraints apply

71. Valuation of Qualifying Applications [per POT] Valuation of Qualifying Applications [per POT] Constrained Allocation Unconstrained Allocation General Auction MAX only Auction MIN Auction POT Auction

72. CfD Allocation – General Principles 15/1616/1717/1818/19 Increasing strike price bid 15/16 17/18 15/16 16/17 17/18 18/19 16/17 15/16   Budget Rule Pot /Budget (Cannot Be Exceeded Except for Pending Projects) Constraint Only competitive where binding constraint (E.g. Pot/MIN/MAX) Across Years All projects in same Pot will compete on strike price basis, regardless of delivery year Bid Prices Projects will be awarded in order of lowest to highest strike price Pay as Cleared Clearing Price set by most expensive successful project in each year (subject to cap at the Technology Admin Strike price).

73. CfD Allocation – Sealed Bids Sealed Bids Bidders submit the lowest strike price they are willing to accept. Sealed Bids Bidders submit the lowest strike price they are willing to accept. General  5 Days sealed bid submission window  No bids above the Admin Strike Price  Withdraw & re-submit bids during submission window  No bids accepted after window closes  System will default Admin Strike price if none is submitted General  5 Days sealed bid submission window  No bids above the Admin Strike Price  Withdraw & re-submit bids during submission window  No bids accepted after window closes  System will default Admin Strike price if none is submitted Flexible Bids  Submit combination of different bid price, capacity, TCW,& TCD  Max 10 Bids per project  Must be same Delivery year or later than original application  Must be same capacity or less than original application Flexible Bids  Submit combination of different bid price, capacity, TCW,& TCD  Max 10 Bids per project  Must be same Delivery year or later than original application  Must be same capacity or less than original application

74. CfD – Competitive Allocation Principles 74 Used to identify Successful applicants and Strike Prices Sealed bid process (includes bidder flexibility) Each delivery year has a separate clearing price Triggered by breach of Budget or Maxima Minimum allocated first Allocation in ascending price order (across years) Years can close independently

75. CfD Allocation – Auction (MINIMA) MIN Requires Auction since (D + H + J) MW is > 100MW, and General Auction is triggered MIN Capacity set at 100 MW    15/1616/1717/1818/19 Increasing bid price  The valuation of ‘D’ & ‘H’ is compared against pot value to ensure both can be allocated ‘J’ Cannot be accepted in MIN auction and is to be considered in general auction ‘D’ & ‘H’ Provisionally allocated with a Cleared price of 118 in 15/16 115 118This project sets clearing price MIN = 100 MW Maximum Value of MINIMA

76. CfD Allocation – Auction (General)  Stack Bids in order of increasing SP  Start Allocating to Bid of lowest Strike Price  All Successful projects delivering in same year gets the same cleared price except MINs - (Subject to Admin Strike Price per Tech)  MAX limits apply Increasing bid price  15/1616/1717/1818/19 MIN = 100 MW Maximum Value of MINIMA A B C MINS E MAX Capacity = 600 MW MAX Exceeded 630 > 600  F CP =95 I G CP = 117 Close Year  Reject all other projects for 15/16 Close Auction to all MAX K Budget CP = 120 CP = 123 CP = 93 CP =102 ** CP = Cleared Price

77. CfD –Allocation Other Detailed Points 77 Bidder Flexibility Tiebreakers Pending Bids

78. CfD Allocation – Flexible Bids Flexible Bids- Increasing Price 15/1616/1717/1818/19 B1 Strike Price Bids B2 D1 C1 D2 A1 A2  Bids are assessed in order of strike price bid (cheapest first). If they fit the budget profile (and don’t exceed MAX) they are accepted.  Same Commissioning Year Flexibility  If a bid is successful, remove from stack all other bids relating to same project E1 E2 Close Year Reject all other bids for 16/17 Budget would be exceeded in 16/17 Next cheapest bid is for same project No budget or MAX breach, accept and remove other ‘B’ bids from stack F1 H1 Budget would be exceeded in 17/18 Next cheapest bid is not for same project Close Year C2

79. CfD Allocations – Tiebreaker Rules  Tie-breaker rules applies where 2 or more projects with the same strike price bid, both cannot be awarded a CfD without exceeding budget limits Assess all combination of tied projects which exceeds budget Choose combination of projects which best uses budget For further ties – Random number generator is to be used Confirm projects with same S.P would exceed budget Consider other flex bids for unsuccessful projects Remove other flex bids for successful projects

80. CfD Allocation to Pending Applicants  Pending Applicants will be required to submit bids during the Bid Submission Window (If Tech is subject to an Auction)  Pending Bids will only be opened (used) by the DB if the Authority concludes the applicant is a Qualifying Applicant  If following CfD Notifications the Pending Applicant becomes a Qualified Applicant, and  If No Auction - the Administrative Strike Price would be applicable to the Pending Application  If Auction – The Pending Applicants lowest bid had to be equal to or lower than the clearing price for the Auction (Relevant Pot & Year); in order to be awarded a CfD.

81. CfD Allocations Audit & SoS Actions  DB will appoint Independent Auditors (IA) What the Independent Auditor Will Do  Unconstrained Round (for each Pot)  Verify if the decision not to Auction is correct  Constrained Allocation, (for each Pot)  Verify if the decision to go Auction is correct  Verify if Sealed Bids (Flexible Bids) were used appropriately  Verify if the Auctions rules were used appropriately to decide result of the Auction SoS Actions  SoS review Audit Report and DB Recommendations  SoS may choose to:  Proceed to Allocation Notifications  Re-run Part/All of the Allocation Process  Terminate & Cancel the Allocation Round 81

82. CfD Allocations Notifications 82  Following successful Allocation process, DB will notify  Unsuccessful Applicants  CfD Counterparty of all Successful Allocation  To Include all relevant applicant details submitted at application  Strike Price, Delivery Dates, Capacity relevant to CfD award  Successful Applicants of their CfD Award  Strike Price, Delivery Dates, Capacity relevant to CfD award  Following Allocation Notifications, DB will  Publish Allocation Round Report  Publish CfD Appeals Register (If Applicable)

83. Contracts For Difference Coffee Break

84. Implementation Next Steps

85. CfD Process – End to End 85 5. Appeal6. Valuation 7. Sealed Bids 8. Allocation & Independent Audit 9. Allocation Notification 1. Pre- Application Activities 2. Application 3. Qualification 4. Review

86. Implementation Coordination Calendar 86 Eligibility and Allocation 21 July 2014 Application and System Readiness Aug 2014 Applicant and System Readiness Sept 2014 Implementation progress Oct 2014 System webinar Sep/Oct 2014

87. Go-Live Process – Applicant Support User Registration Companies register and create Users. System available late Sept/early Oct Guidance Pragmatic Guide to Qualification and Allocation (1 Sept) FAQs (1 Sept) Round Guidance Draft 1 Sept Final 30 Sept Training Screen cast late Sept IS Manuals

88. Industry Readiness  What else do you want / need from DB to be ready for October?  john.perkins3@nationalgrid.com john.perkins3@nationalgrid.com CfD Manager  james.greenhalgh@nationalgrid.com james.greenhalgh@nationalgrid.com EMR Stakeholder Manager

89. Industry Participants CfD Success Factors 89 CategoryMeasures of success SystemsSystems to be available in a timely manner and have ability to allow multi-logon access. SystemsThe system should be user friendly and be easy to use for all participants with good guidance notes and documentation. Navigation in the system should be easy to follow. SystemsTerminology should be consistent between that used in the system and policy documentation. SystemsHave a dedicated central helpdesk for applicant queries and technical support. SystemsThe systems and process should minimise the risk of disputes and the DECC should not radically change the rules and timelines. SystemsEnsure that the system is reliable and any pinch points are resolved beforehand to avoid unavailability during critical periods.

90. Industry Participants CfD Success Factors 90 CategoryMeasures of success ProcessHave an effective way of providing feedback to industry participants for key updates related to CfD applications. ProcessUseful to have worked examples which step through the process of application of a CfD. ProcessGuidance documentation on pre-conditions and requirements on what a CfD applicant needs to provide for qualification to be made available so that there is no room for un-necessary errors leading to disqualification. ProcessOne common channel of communication between the various parties to issue information / updates to industry participants. ProcessTransparency provided on notices and relevant publications (e.g. budget notice).

91. Key documents EMR Statutory Instruments  The Contracts for Difference (Allocation) Regulations 2014 http://www.legislation.gov.uk/id/ukdsi/2014/9780111116777 http://www.legislation.gov.uk/id/ukdsi/2014/9780111116777  The Contracts for Difference (Definition of Eligible Generator) Regulations 2014 http://www.legislation.gov.uk/id/ukdsi/2014/9780111116807http://www.legislation.gov.uk/id/ukdsi/2014/9780111116807  The Contracts for Difference (Standard Terms) Regulations 2014 http://www.legislation.gov.uk/id/ukdsi/2014/9780111116838 http://www.legislation.gov.uk/id/ukdsi/2014/9780111116838  The Contracts for Difference (Electricity Supplier Obligations) Regulations 2014: http://www.legislation.gov.uk/ukdsi/2014/9780111116784/http://www.legislation.gov.uk/ukdsi/2014/9780111116784/  The Electricity Market Reform (General) Regulations 2014 http://www.legislation.gov.uk/id/ukdsi/2014/9780111116791http://www.legislation.gov.uk/id/ukdsi/2014/9780111116791  The Electricity Capacity Regulations 2014: http://www.legislation.gov.uk/ukdsi/2014/9780111116852/ http://www.legislation.gov.uk/ukdsi/2014/9780111116852/

92. Key documents Associated Supporting Documentation  Implementing EMR This publication provides stakeholders with a comprehensive overview of EMR policy at a point where the implementing secondary legislation is laid before Parliament. https://www.gov.uk/government/publications/implementing-electricity-market- reform-emr https://www.gov.uk/government/publications/implementing-electricity-market- reform-emr  New electricity interconnection to GB – operation and revenues: This independent report shows potentially significant revenues are available on the basis of price arbitrage, offering confidence to investors. https://www.gov.uk/electricity-network-delivery-and-access#offshore-electricity- networks-development https://www.gov.uk/electricity-network-delivery-and-access#offshore-electricity- networks-development  Analysis of CfD Supplier Obligation funding options – Redpoint Energy: This report provides an assessment of CfD payment volatility and reserve fund size to support analysis on Supplier Obligation design and estimated costs and benefits as detailed in the Supplier Obligation Impact Assessment. https://www.gov.uk/government/publications/electricity-market-reform-contracts- for-difference https://www.gov.uk/government/publications/electricity-market-reform-contracts- for-difference

93. Associated Supporting Documentation  Updated draft Allocation Framework: This sets out the allocation process including the auction rules and the valuation formula that will be used in the allocation process. A final version of the Allocation Framework will be published in advance of the first allocation round opening for application. Available at: https://www.gov.uk/government/publications/electricity-market-reform-contracts- for-difference https://www.gov.uk/government/publications/electricity-market-reform-contracts- for-difference  Updated High Level Summary of the Allocation Process This summarises how the Allocation Regulation and Allocation Framework work together to establish the allocation regime. Available at: https://www.gov.uk/government/publications/electricity-market-reform-contracts- for-difference https://www.gov.uk/government/publications/electricity-market-reform-contracts- for-difference  The Government response to the October 2013 EMR Consultation on proposals for implementation: https://www.gov.uk/government/consultations/proposals-for-implementation-of- electricity-market-reform https://www.gov.uk/government/consultations/proposals-for-implementation-of- electricity-market-reform Key documents

94. Associated Supporting Documentation  The Government Response to the January Code and License consultation: https://www.gov.uk/government/consultations/emr-consultation-on-industry-code- and-licence-modifications https://www.gov.uk/government/consultations/emr-consultation-on-industry-code- and-licence-modifications  The Government Response to the April Balancing and Settlement Code modifications consultation: https://www.gov.uk/government/consultations/emr- modifications-to-balancing-and-settlement-codebsc-subsidiary-documentshttps://www.gov.uk/government/consultations/emr- modifications-to-balancing-and-settlement-codebsc-subsidiary-documents  The Government Response to the March Low Carbon Contracts Company and Electricity Settlements Company operational costs consultation: https://www.gov.uk/government/consultations/consultation-on-the-emr-operational- cost-levies https://www.gov.uk/government/consultations/consultation-on-the-emr-operational- cost-levies  The Government Response to the March Consultation on directions to offer Contracts for Difference: https://www.gov.uk/government/consultations/electricity-market-reform-emr- contracts-for-difference-regulations https://www.gov.uk/government/consultations/electricity-market-reform-emr- contracts-for-difference-regulations Key documents