Finance
A Contract for Difference (CfD) in renewable energy finance is a contract where a buyer and seller agree on a fixed “strike” price for power, and payments are made based on the difference between this strike price and the market price. If the market price for electricity is below the strike price, the buyer (often a government or utility) pays the project the difference to ensure a stable revenue. If the market price is above the strike price, the project pays back the difference. CfDs are used in some government renewable energy auctions (e.g., in the UK) to provide price certainty for investors and encourage renewable project development.