Extra CfD support for renewables projects

Renewable electricity projects will compete for £300mn in Contracts for Difference (CfD) support this autumn – an increase of £95mn from the indicative budget published in July, according to Energy and Climate Change Secretary Ed Davey.

Low carbon electricity projects will compete at auction for the contracts, which will deliver new capacity much more cheaply than through the previous arrangements, resulting in lower bills, says DECC.

The increased budget will be split between different types of technology:

•       established technologies, such as onshore wind and solar, will compete for up to £65mn, reflecting the fact that these technologies are already more competitive; and  

•       less established technologies, such as offshore wind and marine, will share in up to £235mn, demonstrating the government’s commitment to helping these technologies become as competitive as the more established low carbon generation sources. 

The government says it is able to increase the CfD budget because the latest estimates of the overall costs of other policies, in particular the Renewables Obligation, are lower than expected.

The government also confirmed that the Renewables Obligation will close to new large-scale solar above 5 MW from 1 April 2015. As the sector grows and becomes increasingly competitive, the government is ensuring that bill payers are seeing the benefits.

The government is also changing the way it supports rooftop-mounted solar power, in line with the Solar Strategy. This includes changes to the feed-in tariff scheme with a new degression band for solar installations over 50 kW, which will help to protect existing levels of financial support for this type of rooftop-mounted solar.

•       Meanwhile, National Grid has announced that a total of 62.5 GW of electricity generation capacity has successfully qualified to bid in this December’s Capacity Mechanism auctions. The Capacity Mechanism prequalification process is part of Electricity Market Reform which is intended to procure electricity generation capacity for the winter of 2018/19. The results of the auction will be announced in January 2015.