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Next CfD auction will include onshore wind and solar projects
The government followed up on its November ‘Ten Point Plan for a Green Industrial Revolution’ a week later by setting out its plans for the next round of its renewables support scheme.
The fourth round of the Contracts for Difference (CfD) scheme, the government’s primary method of supporting low-carbon electricity, will open in late 2021 and will aim to double the capacity of renewable energy compared to the last round. Both onshore wind and solar will be eligible to bid this time.
Offshore wind projects dominated the 2019 Round Three CfD auction and delivered record-low prices, says BEIS. Round Three projects are planned to be operational by 2023 to 2025.
Round Four will expand the number of technologies supported, with offshore wind, onshore wind, solar, tidal and floating offshore wind projects all eligible to bid, said the Department for Business, Energy and Industrial Strategy (BEIS). The fourth round aims to increase the capacity of renewable energy from the 5.8 GW achieved in the last round to up to 12 GW.
And, in an attempt to increase participation by UK companies in the renewables supply chain, the new round will be coupled with a consultation looking at ways to support more jobs and private investment, by increasing the competitiveness of UK manufacturers, added BEIS.
The CfD scheme encourages investment in renewable energy by providing projects with a stable income, while protecting consumers from paying increased costs when electricity prices are high. Already, a third of UK electricity comes from renewables.
Government support to unleash the potential of offshore wind generation has seen the cost of this fall by two-thirds in the last five years. Given its long-term potential to support the country’s 2050 net zero target, offshore wind projects will compete in their own ‘pot’ in the next auction process, rather than against other technologies as they have previously, says BEIS. Floating offshore wind projects will be able to bid for contracts for the first time, allowing wind farms to be built further away from the shoreline where it is windiest.
Solar and onshore wind projects will be able to bid for the first time since 2015, coupled with a commitment to update guidance for new onshore wind schemes in England to fully reflect the impacts and benefits to local communities.
In a busy week in late November, the government also published its Spending Review for 2020, which included support for a green recovery from the COVID-19 crisis and its Ten Point Plan.
This included investment to transition to zero emission vehicles (EVs), including providing £1.9bn for charging infrastructure and consumer incentives, and £1.1bn to make homes and buildings net zero-ready. Transport is one of the highest-emitting sectors of the economy, explained the Treasury.
The Spending Review also promised investment in innovative clean energy technologies, including £1bn for a Carbon Capture and Storage Infrastructure Fund, and additional investment in low-carbon hydrogen production, offshore wind, and nuclear power.
The moves were widely welcomed – Energy UK’s Chief Executive Emma Pinchbeck noting that: ‘The energy industry is central to powering and delivering the Green Industrial Revolution – creating jobs, economic growth and lasting benefits for communities around the country and for the environment.’
