Contract For Difference (Cfd)

Contract for Difference (CfD) | H2Terminals

Here at H2Terminals, we recognize that the energy transition needs not just technology innovation but also sound financial instruments to render clean energy investment feasible. One of the most effective policy measures pushing the uptake of green hydrogen and other low-carbon technologies is the Contract for Difference (CfD).

Better knowledge of the green hydrogen supply chain arises from our ability to track the market’s evolution and access financing schemes such as CfDs.

What is a Contract for Difference (CfD)?

A Contract for Difference is a financial instrument employed to hedge the revenues of low-carbon energy generators. Under this program, the difference between the “strike price” (a predetermined fixed price for energy generation) and the “market price” (fluctuating price of electricity or hydrogen in the open market) is covered by a government or public body.

If the market price is lower than the strike price, the producer receives a top-up payment. If it is higher, the producer pays back the difference. It offers a secure revenue stream, which makes it easier for developers to secure finance and advance projects in a secured way.

Contract for Difference (CfD)

CfD and Green Hydrogen Production

For new technologies like the production of green hydrogen, CfDs are a powerful way of leveling the playing field to fossil-fuel-based hydrogen and other conventional fuels. The production cost of green hydrogen—based on electrolysis with renewable power—is still higher than grey or blue hydrogen. This is because clean electricity, electrolyzers, and infrastructure are expensive.

Through introducing a CfD regime specifically for hydrogen, governments can:

  • Accelerate green hydrogen project scale-up
  • Promote private finance for clean technologies
  • Decrease dependence on fossil fuel-based hydrogen
  • Enable industrial decarbonisation

H2Terminals is an active participant in CfD schemes in international hydrogen markets and assists clients and partners in utilizing these vehicles to develop commercially sustainable clean hydrogen projects.

Contract for Difference (CfD)

Our Role in CfD-Supported Hydrogen Projects

With a full-service capacity in the green hydrogen value chain, H2Terminals offers turnkey support to CfD-financed hydrogen projects like:

We identify projects likely to be viable with CfD support, review local regulatory environments, and develop a financial plan that is tied to program goals.

We assist clients in the preparation of robust bids to CfD auctions, such as technical reports, cost estimates, and emissions impact analysis.

We employ sophisticated models for calculating optimal strike prices under market predictions, project risk, and assumptions for investment returns.

We've expertly mastered the production, storage and transport of green hydrogen and ensure that all offered CfD-compliant plants meet performance requirements.

CfD agreements, data, emissions and financial reporting are all areas covered by our ongoing compliance.

Advantages of CfD Participation

Through CfD-supported projects, industrial consumers and green hydrogen producers can benefit from the following advantages:

  • Revenue security across long contract durations (usually 10–15 years)
  • Greater bankability and access to finance
  • Lower exposure to price-volatile energy markets
  • Policy suitability with national and regional decarbonisation strategies
  • Increased competitiveness of green hydrogen compared to fossil fuels

Enabling a Low-Carbon Economy

As governments make net-zero commitments, CfDs are becoming a critical tool for scaling clean technologies. H2Terminals enables CfD projects in Europe, Asia, and North America, helping to fill the economic gap between green hydrogen’s early stages and commercial readiness.

You’re an energy developer, industrial off-taker, or public organization crafting a hydrogen subsidy program – H2Terminals provides the expertise and infrastructure to get the most out of CfDs.

Let's Build the Future Together

At H2Terminals, we’re committed to turning clean hydrogen not only viable—but scalable, affordable, and profitable. By leveraging our experience in green hydrogen production and strategic engagement with Contract for Difference mechanisms, we enable partners to take the lead in the clean energy revolution.

Call us today to find out how we can assist you in utilizing CfD structures to enable your next hydrogen project.

Contract for Difference (CfD)

A CfD is an agreement supported by the government offering a guarantee of a fixed price to energy producers, shielding them from volatile market prices.

It offers price certainty and revenue stability in the longer term, making green hydrogen cost competitive.

Clean energy producers, industrial consumers, and on-regulatory basis eligible hydrogen producers can apply through formal tenders.

Yes, we assist clients from CfD application and financial modeling all the way to project delivery and regulatory support.

Unlocking a Zero-Carbon Future Through Green Hydrogen

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