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Place your chosen image here. The four corners must just cover the arrow tips. For covers, the three pictures should be the same size and in a straight line. EMR Delivery Body Contract for Difference – March 2017

Agenda ¾ About the Allocation Process ¾ Allocation Process Overview ¾ System Registration ¾ Application Submission ¾ Pre-Validation Checks ¾ Qualification Assessment ¾ Allocation Overview ¾ Round 2 Key Features ¾ Valuation ¾ Sealed Bid Rules ¾ Auction Scenarios ¾ Cf. D Systems ¾ Future Engagement 2

The team… Cf. D Manager Yasharn Smith EMR Delivery Manager Paul Mullen EMR Analyst Anna Holleron EMR Analyst Charlotte Watts Ben Smith Senior EMR Analyst Nisar Ahmed Senior EMR Analyst Mark Baker EMR Analyst Arjun Mukkara 3

Place your chosen image here. The four corners must just cover the arrow tips. For covers, the three pictures should be the same size and in a straight line. About the Allocation Process

Allocation Process Overview 1 Registration & Pre-Application Applicants 1 Register Apply Supply Chain approval Register Applicants Assess Eligibility RO Check Minor & Necessary Agreement Application & Qualification Request Review Allocation & Notification 1 Request Appeal Sign Contract Submit Sealed Bids Round Variation / Budget Revision Notices Review Qualified Applicants Run Auction & Allocate Appeal 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 Register before the Application window opens – (9 am on 3 April) Company Details and Company number must match exactly Don’t edit or delete sections of registration form Guidance available Registered Company = Applicant 6

Application Submission April 2017 Application Window 3, April 2017 (9 am) Application Window opens Applicants can create, save, submit, withdraw and re-submit applications 21, April 2017 (5 pm) Application Window closes Only submitted applications will be taken forward to qualification assessment 7

Pre-Validation Checks Why: To help Applicants Submit Applications Right 1 st Time When: 9 am on 3 April to 5 pm on 21 April (on a reasonable endeavours basis if after 5 pm 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 8

Key Qualification Criteria Connection Agreement/Countersigned Offer/Signed Offer Acceptance Planning Decision Notice Supply Chain Approval Certificate if >=300 MW 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 capacity requirements Application Form to include technology, contact details, location, capacity and target dates

Connection Agreement - Direct Connection 3. 1. 1. 1 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 Note: Mandatory to have a signed Connection Agreement otherwise the application would FAIL checks Locational and technology consistency checks Transmission Entry Capacity/Capacity >=75% capacity applied for Connection Date in Connection Agreement <= Target Commissioning Date applied for

Connection Agreement – Partial Connection Output to transmission/ distribution system and private wire network 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 checks Locational and technology consistency checks 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 Output to private wire network only Applicants Required to upload: Private Network Use Agreement (where Generator not operator of Private Network)* checks Locational and technology consistency checks 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’. 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. Section 36 Development Order Planning Permission Transport Works Act Order * Marine Licence *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 Cf. D Application, provide appropriately signed and dated supporting evidence to clarify that such expiry date is extended to date after date of Cf. D 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 Planning Decision Notice What isn’t acceptable evidence Planning committee meeting minutes Outline Planning Permission

Place your chosen image here. The four corners must just cover the arrow tips. For covers, the three pictures should be the same size and in a straight line. Thank You & Questions

Place your chosen image here. The four corners must just cover the arrow tips. For covers, the three pictures should be the same size and in a straight line. EMR Delivery Body Allocation Overview

Allocation Timeline Applicants Pre-Application Activities Application & Allocation & and Registration Qualification Notification Register Apply Supply Chain approval Register Applicants Request Review Request Appeal Submit Sealed Bids Sign Contract Round Variation / Budget Revision Notices Assess Eligibility RO Check Minor & Necessary Agreement Qualified Applicants Run Auction & Allocate Review Appeal Contract Management 19

Key Allocation dates – Earliest 16 th May 24 th May Valuation Window Invitation to Sealed Bids Window 25 th May Sealed bid window - 5 working days 2 nd June Run Auction / Audit process – Max 12 working days 19 th June 22 nd June Auction Results to BEIS/ Sec of State – 2 working days Release of Auction Results to Applicants Please see the implementation plan for a range of different timeline scenarios 20

Place your chosen image here. The four corners must just cover the arrow tips. For covers, the three pictures should be the same size and in a straight line. 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) Round 2: Key Auction Features Interleaving (Applicable to Flexible Bids across Delivery Years) Auction 22

Place your chosen image here. The four corners must just cover the arrow tips. For covers, the three pictures should be the same size and in a straight line. EMR Delivery Body Valuation

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 ASP: Maximum Strike Price (£/MWh) that applies to an Application. Reference Price: Market Electricity Price (£/MWh) in a given time period X Capacity X Technology Specific Factors MW value provided by i. e. Load Factors and Applicants other multipliers (see Round specific Allocation Framework for full X General Conversion Factors i. e. Transmission Losses, hours to days etc. (see Round specific Allocation Framework for full details) 24

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 83. 2% 365 0. 79% 0. 5 1 2023/24 - 47. 68 83. 2% 366 0. 79% 0. 5 1 2024/25 - 52. 29 83. 2% 365 0. 79% 0. 5 1 Application 1 Technology: ACT Capacity: 20 MW TCD: 12 -12 -21 Budget Impact 2021/22 Budget Impact 2022/23 Budget Impact 2023/24 = ( ( = ( Y 1 F = 1 - (NO. OF DAYS TO TCD/ Y 1 F = 1 - (255/365) =0. 30136986 TOTAL NO. OF DAYS) Strike Price 125 Days 365 X 24 ) Strike 125 Price Days 365 X 24 Reference 39. 86 Price X ( ) 125 Price Strike 1 - TLM 0. 0079 Reference 42. 6 Price X ( 1 - ) X TLM 0. 0079 47. 68 Price Reference - ) X Load Factor 0. 832 X YR 1 F X Budget Impact Millions ACT £ 20 ) X RQM 0. 5 0. 30136 X CHPQM 1 £ 15 Load Factor 0. 832 £ 10 ) X RQM 0. 5 X X £ 5 0. 832 Load Factor YR 1 F 1 = X X 1 YR 1 F X X £ 1, 855, 309. 42 Capacity 20 = CHPQM 1 Capacity 20 X £ 5, 958, 131. 63 20 Capacity X £ 0 ( Days 365 X 24 ) X ( 1 - TLM 0. 0079 ) X 2021 -22 RQM 0. 5 2022 -23 X 2023 -24 CHPQM 1 = 2024 -25 £ 5, 606, 127. 21 Application 1 Budget Impact 2024/25 = ( ( 125 Price Strike Days 365 X 24 52. 29 Price Reference ) X ( 1 - 0. 832 Load Factor ) X TLM 0. 0079 ) X RQM 0. 5 X X 1 YR 1 F CHPQM 1 X = 20 Capacity X £ 5, 257, 472. 71

BUDGET IMPACT CALCULATION ASP (2012) £/MWh RP £/MWh LOAD FACTORS DAYS TLM RQM CHPQM 2021/22 105 39. 86 47. 7% 365 0. 79% 1 1 2022/23 100 42. 6 47. 7% 365 0. 79% 1 1 2023/24 - 47. 68 47. 7% 366 0. 79% 1 1 2024/25 - 52. 29 47. 7% 365 0. 79% 1 1 Application 2 - P 1 Technology : Offshore Wind Capacity: 100 MW TCD: 09 -03 -23 Budget Impact 2022/23 Budget Impact 2023/24 – P 1– & 2023/24 P 1 P 2 Budget Impact 2024/25 ––P 1, P 2&P 3 2024/25 P 1 2023/24 2024/25 –& P 2 P 2 P 1 Budget Impact 2024/25 – P 2 P 3 = ( ( = Days 365 X 24 ) Days 366 X 24 ( ( Days 366 365 X 24 X ( ) X - ) 100 Price Strike Days 365 Reference 42. 6 Price - 100 Price ( Strike £ 39, 556, 453. 48 + ( = Strike Price 100 £ 23, 531, 412. 21 + ( Strike 100 Price ( = Application 2 – P 2 Technology : Offshore Wind Capacity: 50 MW TCD: 01 -02 -24 X - TLM 0. 0079 £ 50 £ 45 Reference 47. 68 Price ) X£ 40 £ 35 ( 1 TLM £ 30 0. 0079 £ 25 47. 68 52. 29 Reference + Price ) X£ 20 £ 15 £ 10 ( 1 TLM £ 5 0. 0079 £ 0 52. 29 Price Reference ) 1 X ( 1 - Application 2 – P 3 Technology : Offshore Wind Capacity: 50 MW TCD: 15 -01 -25 ) X Millions Offshore Wind Load Factor 0. 477 ) X RQM 1 X Load Factor 0. 477 ) 0. 06302 YR 1 F X RQM 1 ) X RQM 1 CHPQM 1 X X 0. 477 Load Factor X X ) X Application 1 RQM 1 X YR 1 F 1 X Capacity 100 = X 0. 16393 1 YR 1 F CHPQM 1 X = 1 YR 1 F X 2023 -24 Application 2 CHPQM 1 = X £ 1, 499, 425. 18 Capacity 100 = CHPQM 1 0. 477 Load Factor 2022 -23 X 2021 -22 ) X TLM 0. 0079 X Budget Impact X £ 21, 748, 729. 47 100 50 Capacity X £ 19, 778, 226. 74 £ 1, 782, 682. 74 50 Capacity 2024 -25 X £ 9, 889, 113. 37

Place your chosen image here. The four corners must just cover the arrow tips. For covers, the three pictures should be the same size and in a straight line. EMR Delivery Body Sealed Bid Rules

Sealed Bids ¾ 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 ¾ At this point applicants will be able to enter (for each sealed bid) a different: Strike Price TCW TCD Capacity ¾ 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) ¾ Each Sealed Bid must: ¾ be submitted in 2012 prices (pounds sterling) ¾ 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) ¾ not exceed the relevant ASP ¾ Not exceed the capacity of the original application (can only be equal to or less) 28

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). 29

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What are we going to cover Sealed Bids How the Maxi pot fits into the general auction Bids caped at ASP / not submitting a sealed bid Impact on budget both maxi and general Closing delivery years Interleaving process Flexible bids across delivery years 31

BID STACK A 1 80. 121 (2021 -22) A 2 60. 42 (2021 -22) A 3 75. 323 (2022 -23) A 4 70. 34 (2022 -23) D 1 50. 23 (2021 -22) F 1 105. 00 (2022 -23) C 2 D 2 84. 123 (2022 -23) D 3 80. 458 (2022 -23) 64. 666 (2021 -22) 80. 458 (2022 -23) D 4 77. 754 (2022 -23) D 3 A 1 80. 121 (2021 -22) D 4 77. 754 (2022 -23) A 3 B 1 E 1 40. 00 (2022 -23) 65. 294 (2022 -23) B 2 E 2 57. 212 (2022 -23) 55. 32 (2022 -23) 75. 323 (2022 -23) C 1 73. 22 (2022 -23) A 4 70. 34 (2022 -23) E 1 65. 294 (2022 -23) D 2 C 1 73. 22 (2022 -23) C 2 84. 123 (2022 -23) F 1 105. 00 (2022 -23) 64. 666 (2021 -22) A 2 60. 42 (2021 -22) B 2 57. 212 (2022 -23) E 2 55. 32 (2022 -23) D 1 50. 23 (2021 -22) B 1 40. 00 (2022 -23) 32

Place your chosen image here. The four corners must just cover the arrow tips. For covers, the three pictures should be the same size and in a straight line. EMR Delivery Body General Auction – Basic Overview

GENERAL POT AUCTION £ 300, 000 £ 290, 000 C 2 £ 250, 000 84. 123 (2022 -23) C 1 D 3 80. 458 (2022 -23) £ 200, 000 A 2 A 1 80. 121 (2021 -22) D 4 £ 150, 000 E 2 E 2 77. 754 (2022 -23) A 3 £ 100, 000 D 1 D 1 B 1 B 1 75. 323 (2022 -23) C 1 73. 22 (2022 -23) £ 50, 000 A 4 70. 34 (2022 -23) E 1 65. 294 (2022 -23) DY 1 2021/22 DY 2 2022/23 VY 1 2023/24 VY 2 2024/25 D 2 64. 666 (2021 -22) A 2 60. 42 (2021 -22) B 2 57. 212 (2022 -23) E 2 55. 32 (2022 -23) D 1 60. 42 D 1 40. 00 (2022 -23) E 2 B 1 55. 32 70. 00 (ASP) 50. 23 (2021 -22) B 1 73. 22 DY 1 2021/22 DY 2 2022/23 34

Place your chosen image here. The four corners must just cover the arrow tips. For covers, the three pictures should be the same size and in a straight line. EMR Delivery Body General Auction – Delivery Year Closure

GENERAL POT AUCTION DY CLOSURE G 1 F 1 D 3 £ 250, 000 A 2 84. 123 (2022 -23) 80. 458 (2022 -23) £ 200, 000 E 2 A 2 E 2 D 4 77. 754 (2022 -23) A 3 £ 150, 000 C 1 £ 100, 000 D 1 D 1 B 1 B 1 73. 22 (2022 -23) F 1 72. 00 (2022 -23) £ 50, 000 A 4 70. 34 (2022 -23) E 1 65. 294 (2022 -23) E 2 D 1 75. 323 (2022 -23) De A 1 80. 121 (2021 -22) DY 1 2021/22 DY 2 2022/23 VY 1 2023/24 liv e Cl ry Y os ed ear C 2 De £ 300, 000 £ 290, 000 liv e Cl ry Y os ed ear G 1 105. 00 (2021 -22) VY 2 2024/25 D 2 64. 666 (2021 -22) A 2 60. 42 (2021 -22) B 2 57. 212 (2022 -23) E 2 55. 32 (2022 -23) D 1 60. 42 D 1 40. 00 (2022 -23) B 1 55. 32 50. 23 (2021 -22) B 1 DY 1 2021/22 DY 2 2022/23 36

Place your chosen image here. The four corners must just cover the arrow tips. For covers, the three pictures should be the same size and in a straight line. EMR Delivery Body General Auction – with Maxima

£ 250, 000 I 1 I 1 C 1 A 1 A 1 E 2 E 2 E 2 H 1 J 1 H 1 84. 123 (2022 -23) K 1 J 1 80. 458 (2022 -23) H 1 [M] 80. 121 (2021 -22) £ 200, 000 J 1 77. 754 (2022 -23) I 1 £ 150, 000 75. 323 (2021 -22) C 1 [M] £ 100, 000 73. 22 (2022 -23) F 1 [M] 72. 00 (2021 -22) H 2 [M] 70. 34 (2022 -23) DY 1 2021/22 E 1 65. 294 (2022 -23) I 1 D 1 D 1 B 1 £ 50, 000 DY 2 2022/23 VY 1 2023/24 De K 1 G 1 De F 2 [M] £ 300, 000 £ 290, 000 liv e Cl ry Y os ed ear G 1 105. 00 (2021 -22) liv e Cl ry Y os ed ear GENERAL POT AND MAXIMA AUCTION. 80. 121 VY 2 2024/25 D 2 64. 666 (2021 -22) A 1 [M] 60. 42 (2021 -22) A 1 [M] 150 MW 140 MW H 1 120 MW B 2 [M] F 1 H 2 100 MW C 1 E 2 60 MW 57. 212 (2022 -23) 55. 32 (2022 -23) D 1 50. 23 (2021 -22) B 1 [M] 40. 00 (2022 -23) 80 MW A 1 80. 121 D D 1 1 60. 42 75. 323 80. 121 B 1 Capacity Pot E 2 B 1 [M] 73. 22 77. 754 40 MW 20 MW 73. 22 DY 1 2021/22 DY 2 2022/23 38

Place your chosen image here. The four corners must just cover the arrow tips. For covers, the three pictures should be the same size and in a straight line. EMR Delivery Body General Auction – with Interleaving

INTERLEAVING G 1 H 1 F 2 84. 123 (2022 -23) J 1 J 1 £ 100, 000 J 1 I 1 K 2 K 2 K 1 C 1 C 1 C 1 D 2 D 2 D 1 D 2 A 1 A 1 A 1 £ 50, 000 E 1 E 1 £ 250, 000 82. 7 (2022 -23) K 2 80. 458(2022 -23) £ 200, 000 H 1 [M] 80. 121 (2021 -22) I 1 £ 150, 000 75. 323 (2021 -22) C 1 [M] 73. 22 (2022 -23) F 1 [M] 72. 00 (2021 -22) H 2 [M] DY 1 2021/22 K 1 65. 294 (2021 -22) B 2 [M] E 1 55. 32 (2022 -23) D 1 50. 23 (2021 -22) B 1 [M] 40. 00 (2022 -23) K 2 84. 123 82. 7 I 1 o Lo p ng v i C 1 [M] a 84. 123 le r te In DY 2 2022/23 VY 1 2023/24 150 MW 140 MW H 1 F 2 120 MW F 1 H 2 100 MW C 1 VY 2 2024/25 A 1 B 1 [M] 40 MW 20 MW 73. 22 84. 123 B 1 Capacity Pot op o L A 1 [M] ing v a 80. 121 e rl Inte E 1 E 1 73. 22 80. 458 82. 7 84. 123 80 MW 60 MW 80. 121 75. 323 64. 666 (2021 -22) 57. 212 (2022 -23) 80. 121 D 2 D 2 A 1 [M] J 1 84. 123 B 1 70. 34 (2022 -23) 70. 34(2022 -23) 60. 42 (2021 -22) K 2 liv e Cl ry Y os ed ear F 2 [M] £ 300, 000 £ 290, 000 De 105. 00 (2021 -22) DY 1 2021/22 DY 2 2022/23 40

Place your chosen image here. The four corners must just cover the arrow tips. For covers, the three pictures should be the same size and in a straight line. CFD Systems

Systems Update Web Based System Compatible with IE and Firefox Not compatible with Apple Mac - please contact us Validation to support Applicants No restrictions on file formats but must be <= 2 MB 2 Factor Authentication process Can upload zip files 42

Place your chosen image here. The four corners must just cover the arrow tips. For covers, the three pictures should be the same size and in a straight line. Thank You & Questions

Place your chosen image here. The four corners must just cover the arrow tips. For covers, the three pictures should be the same size and in a straight line. Future Engagement

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

How to Contact us? 02072155000 01926655300 02072118881 beiscontractsfordifferenc e@beis. gov. uk box. emr. cfd@nationalgrid. com info@lowcarboncontra cts. uk 46

Place your chosen image here. The four corners must just cover the arrow tips. For covers, the three pictures should be the same size and in a straight line. Thank You & Questions