‘Most successful ever’: Latest CfD auction secures 11GW of renewables capacity
The latest round of the Contracts for Difference (CfD) scheme has been lauded by the Government as the most successful ever, with more than 11GW of renewables capacity securing contract, including a big milestone for floating offshore wind.
The UK’s Department for Business, Energy and Industrial Strategy (BEIS) unveiled the results of the fourth CfD round on Thursday morning (7 July).
In total, 93 projects with existing planning permission across the UK have now secured contracts, totaling 11GW in capacity. According to the Government, this is greater than the capacity of all three previous CfD rounds combined.
The majority of contracts went to offshore wind projects, with 7GW now confirmed through the scheme. Once online, it will increase the nation’s overall offshore capacity by one-third and builds towards the Government’s aiming of installing 50GW of offshore wind capacity by 2030.
The prices for contracts of offshore are also 70% lower than those secured in the first CfD allocation back in 2015.
Both onshore wind and solar energy were included in CfD auctions for the first time since 2015. Onshore secured around 0.9GW of new capacity, with prices per unit 45% lower than in 2015, while more than 2.2GW of new solar capacity was secured.
Floating offshore wind and tidal projects were also eligible for CfD auctions for the first time this round. Floating offshore wind secured 32MW of capacity, while tidal secured 41MW.
Business and Energy Secretary Kwasi Kwarteng said: “Eye-watering gas prices are hitting consumers across Europe. The more cheap, clean power we generate within our own borders, the better protected we will be from volatile gas prices that are pushing up bills.
“Thanks to today’s record renewable energy auction, we have secured almost 11GW of clean, home-grown electricity – which would provide as much power as around 6 gas fired power stations. These energy projects already have planning permission, now they have a funding contract in place. We’re going to these projects built as soon as possible to better protect millions of British families from rising costs.”
The Government also notes that an added benefit of the CfD auctions are the generators pay money back into the scheme when wholesale electricity prices are high – as they are now – which should reduce the net costs of the scheme to consumers.
Energy Security Bill
The announcement comes just days after the publication of the Energy Security Bill, which contains 26 measures which Ministers claim will address the energy trilemma of security, affordability and environmental sustainability.
The Government claims that its inclusions will help to unlock £100bn of private sector investment in the UK’s energy sector by 2030. The lion’s share is expected to go to offshore wind. The Bill proposes measures to streamline grid connections for offshore wind farms. Ministers are also speaking to investment opportunities in emerging technologies such as green hydrogen production and carbon capture, use and storage (CCUS).
However, reaction to the initial publication of the Bill has been mixed, with green groups pointing out that the measures detailed largely mimic the focus areas of the recent Energy Security Strategy, showing little evidence that the Government has heeded repeated calls to go further and faster on issues such as onshore wind, solar power and energy efficiency.
Comments on CfD
The Energy and Climate Intelligence Unit’s (ECIU) head of analysis Dr Simon Cran-McGreehin said: “To keep bills low, these new wind farms can’t come online soon enough. At today’s prices with gas so expensive every household would be getting the equivalent of a £100 net zero dividend. In the meantime, existing wind and solar projects are already doing their bit to help bill payers, saving an estimated £1.3bn over 18 months in the current gas crisis.”
Climate Change Committee chief executive Chris Stark tweeted: “[These are] remarkable prices. And especially since commodity prices will be so uncertain over this period. Green power is cheap power.”
The Association for Renewable Energy & Clean Technology’s (REA) chief executive Dr Nina Skorupska said: “These record low CfD prices are good news for the UK’s energy system and showcase the value to consumers of moving to renewables. Built at prices well below current market rates, these renewable power projects will be paying back to consumers and saving us all money.
“The 11GW of capacity being delivered will be essential for the UK’s energy security as we look to reduce our reliance on expensive, imported fossil fuels.
“We now need an expansion of the CfD scheme to six monthly auctions and extend reserved capacity for other technologies, such as geothermal and wave projects, which have the potential to be as low cost as offshore wind and employ thousands of people.”
Solar Energy UK’s chief executive Chris Hewett said: “Today’s announcement of over 2GW of subsidy-free contracts cements solar as a major part of the solution to Britain’s energy security crisis. Solar and wind are now undeniably the cheapest, as well as the cleanest, way to power the country.
“CfDs are only one way to deliver solar. There are many solar farms already under construction that will sell their power directly to the market, and rooftop installations are cutting corporate and household energy bills.”
Vattenfall’s country manager for the UK, Danielle Lane, said: “Winning a CfD for Norfolk Boreas is great news for the UK’s net-zero future and fundamental to meeting the government’s targets for offshore wind.
“Today is a major step forward as we look to create a low cost, low carbon energy system. This auction firmly places the UK as a superpower of renewable energy, accelerates the delivery of our climate targets and reduces our reliance on expensive, imported gas.”
Peel NRE’s development director for renewables Rob Tate said: “I’m pleased that both of our projects have been recognised and that we’re able to play our part in providing the infrastructure needed to scale up the country’s renewable efforts.
“This Government support is excellent news to help secure the future of cleaner energy generation in Scotland and it moves us closer to the delivery stage of our two wind farms in The Shetlands.
“It also supports the UK’s wider journey towards net-zero and is a step in the right direction towards addressing the global energy crisis and rising costs.“
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