Contracts for Difference (CfDs) have emerged as a key policy instrument to incentivize renewable energy investments by mitigating revenue volatility. However, conventional CfDs, while effective in fostering growth in renewable energy sources, can introduce market distortions. These distortions arise from misaligned incentives, particularly the ‘produce-and-forget’ mentality, where generators prioritize maximizing production without considering market signals. To address these challenges, in recent years, alternative CfD designs have been proposed in the literature with the aim of enhancing market integration by decoupling payouts from real-time generation, and aligning generator incentives with market outcomes. However, the challenge is that these modified CfDs introduce basis risk, where discrepancies between reference prices and output, and actual prices and output, can lead to financial volatility.