From Allocation Round 4 (AR4), a Contract for Difference (CfD) pays nothing in any hour the reference price is negative. That sounds like a simple instruction: switch off when prices go below zero. It is not, because the reference price blends two day-ahead auctions, and near zero they often disagree.

To show this, we have looked at two transmission-connected plants on the rule. Cleve Hill, a 112 MW AR4 solar unit in Kent, ran through all 28 daylight hours this year when one auction was negative and the blended reference price was not. A newer Scottish wind farm on the same rule took the opposite approach. Since its CfD began settling in June, it has switched off in 15 of those hours, missing an estimated £45k of Difference Payments.

The CfD rule depends on two day-ahead auctions that close at different times

The reference price for wind and solar CfDs, the Intermittent Market Reference Price (IMRP), is the volume-weighted average of the EPEX Spot and N2EX GB day-ahead hourly auctions. From AR4, the Low Carbon Contracts Company (LCCC) pays no Difference Payment in any hour IMRP is below £0. AR2 and AR3 contracts lose it only after six negative hours in a row, and AR1 contracts never do.

Only 1.3 GW of wind and solar capacity works under the one-hour rule today. A further 30 GW is contracted and due to start between 2026 and 2032, so getting the decision right will soon matter across much of the GB generation stack.