PS23278 - Assessing the costs and benefits of the non-price factors in CfDs - MC

***** THIS IS AN AWARD NOTICE, NOT A CALL FOR COMPETITION *****

This procurement is being concluded following a mini competition under the CCS Research and Insights DPS - RM6126

The Requirement

The aim of this work is to inform the implementation of the non-price factors in the CfD scheme. This will complement internal analysis. The analysis and final report will also be used to inform and provide an evidence base for preparation of the Impact Assessment.

The objective of this project will be to design a counterfactual and then in detail to appraise the impacts, including costs and benefits of each non-price factor. The non-price factors are as follows (more details will be shared with the successful bidder):

• Deprived areas (this NPF would aim to reward a project's investments in areas near deployment zones where there are greater levels of socio-economic deprivation)
• Small and medium-sized enterprises (this NPF would aim to reward projects for spending a minimum percentage of total project spend on small and medium-sized enterprises (SMEs) i.e., businesses with less than 250 employees and turnover under €50 million, as per standard UK and EU definitions) as part of their supply chain;
• Decarbonisation (this NPF would aim to reward projects with the least carbon intensive supply chains. As a result, we propose that projects are scored on decarbonisation against the methodology from the Sustainability Joint Industry Programme, a collaboration between the Carbon Trust and offshore wind developers, which is planned to be made publicly available and will offer a standardised means of measuring carbon emissions through the lifecycle of offshore wind projects. A number of developers are working in collaboration with the Carbon Trust to develop the methodology, and this criteria would incentivise developers to act on reducing the emissions measured.)
• Environmentally sustainable supply chains (this NPF would aim to reward projects which use a higher proportion of suppliers operating environmentally sustainable manufacturing and procurement practices)
• DESNZ may add an additional NPF, TBC.

This project is seeking to access specialist external technical and project finance expertise otherwise not available in DESNZ which will support robust implementation of non-price factors in the CfD scheme for the offshore wind and floating offshore wind sector. This will complement internal analysis on overall value for money and ensure we pay a fair price for incentivising supply chain development.