Kröger, M. and Newbery, D. M.

Renewable Electricity Contracts: Lessons from European Experience

Papeles de Energia

Vol. 24 pp. 37 (2024)

Abstract: In response to commitments to massively increase Variable Renewable Electricity (VRE) and to reduce the cost of financing capital-intensive low-variable cost VRE the EU Commission requires that all future support payments must come through two-sided Contracts for Differences (CfDs). This article compares the extent to which current and proposed future European CfDs deliver efficient investment and operating signals. It confronts these design options with wholesale price data from Germany, Spain, and Great Britain to see how they score in reducing risk and hence finance cost while delivering efficient investment and operating decisions at least cost to consumers.

Keywords: Renewable Electricity Contracts, Variable Renewable Electricity (VRE)

Author links: David Newbery  

Publisher's Link: https://www.funcas.es/revista/papeles-de-energia-24/

Open Access link: download pdf