The Low Carbon Carrot - contracts for difference

"Not brute force but only persuasion and faith are the kings of this world." - Thomas Carlyle 

Contracts for difference, or to give them their full name FIT CfD (Feed in tariff with contract for difference) are the UK government's proposed mechanism for providing incentives for future investment in low carbon electricity generation.

Why are they important?

FIT CfD is part of the wider proposals contained within the Electricity Market Reform White paper published in 2011 and further refined in the Draft Energy Bill in 2012. An overhaul of the UK electricity market is urgently required for several reasons:

1. Expected loss of around 25% of UK generating capacity in next ten years as older plants close.
2. Commitment to 15% energy from renewables by 2020.
3. Legally binding target of 80% reduction in CO2 emissions by 2050.