- Government’s largest renewable energy auction program opens with Â£ 285million per year in funding for low-carbon technology, moving UK away from volatile foreign fossil fuels
- the fourth round aims to secure more capacity than the previous 3 rounds, combined with additional offshore wind capacity that could produce electricity equivalent to powering around 8 million homes
- offshore wind will be supported by funding of Â£ 200million per year, of which Â£ 24million initially earmarked for floating offshore wind and Â£ 20million for tidal current projects – with solar wind and terrestrial included for the first time since 2015
The largest ever round of the UK government’s flagship renewable energy support program is open for applications today (Monday 13 December), with Â£ 285million available per year for building the next generation of projects. green energy in Great Britain.
Renewable energy projects across Britain can now bid for funding in the Fourth Round of Contracts for Difference (CfD), which aims to secure 12 GW of electrical capacity – more renewable capacity than the previous 3 rounds combined. The additional offshore wind capacity resulting from the financing alone could generate enough electricity to power around 8 million homes.
Compared to the previous cycle, this one is open to an increased number of renewable energy technologies, with offshore wind, onshore wind, solar, tidal and offshore wind projects, among others, all eligible to bid. for funding as part of the program’s auction process – this will ensure we have a safer and more resilient energy system and support the UK’s transition to net zero through a wider range of energy sources .
The competitive nature of the CfD This program has been hugely successful in boosting the deployment of renewable energy across Britain while rapidly reducing costs. The design of the device led to a drop of approximately 65% ââin the unit price of offshore wind between the first allocation round (AR) in 2015 and the third in 2019.
Business and Energy Secretary Kwasi Kwarteng said:
Our larger renewable energy auction opening today will strengthen the UK’s role as a global leader in renewable electricity, while supporting new, sustainable industries across the country to create new jobs.
By generating more renewable energy in the UK, we can ensure greater energy independence by moving away from volatile global fossil fuel prices, while reducing the cost of new energy.
A total budget of Â£ 285million per year has been allocated in the fourth round, with Â£ 200million available for offshore wind, Â£ 75million for emerging technologies, such as remote island wind, the tidal stream and floating offshore wind, and Â£ 10million for established technologies, such as solar and onshore wind.
Under emerging technologies, Â£ 24million per year has been earmarked for floating offshore wind projects and Â£ 20million initially earmarked for tidal projects, demonstrating government support for new innovative technologies that can make a significant contribution to the UK’s decarbonization commitments.
The Â£ 20million a year support for tidal projects represents the biggest investment in tidal power in a generation, opening a whole new chapter for the tidal industry which could also have the benefit of creating jobs at across the UK.
Onshore wind and solar compete in an allocation cycle for the first time since 2015, and the government is seeking significant capacity from these technologies that will help us achieve the levels of deployment required in line with climate change targets.
Subject to the outcome of the competitive auction, it is expected that AR4 will be a major step towards realizing the government’s increased ambition to have 40 GW of offshore wind by 2030, including 1 GW from floating offshore wind, as outlined in the Ten Point Plan for a Revolution green industrial.
Energy and Climate Change Minister Greg Hands said:
The Contracts for Difference program is proof that ecology and growth go hand in hand, as it continues to be a key driver of the renewable energy sector, a world leader, which provides us with clean and secure energy, creates jobs in all over the UK and opens up investments. and export opportunities.
The previous 3 cycles have allowed us to advance the green industrial revolution and this cycle will take us further and faster than ever while continuing to reduce costs for consumers.
The supply chain planning process has also been strengthened, so that the CfDThe fourth cycle can support the effective development of open and competitive supply chains and promote innovation and skills in the low-carbon power generation sector.
Renewable UK CEO Dan McGrail said:
This is a landmark auction securing the largest amount of new renewable energy capacity to date, as ministers heeded our calls for the overall capacity cap to be lifted to reflect the huge appetite of Canadians. companies and investors for UK projects.
More than 16 GW of wind could be ready to compete and more than 23 GW of renewable energy in total. We could see investments of over Â£ 20 billion in this cycle, creating thousands of jobs and lowering costs for energy consumers.
We need a range of renewable technologies to get us to net zero as quickly as possible, so it’s great to see the development of innovative wind turbine and floating tidal stream projects supported by earmarked funding, like us. advocated it. This will allow us to accelerate the deployment of these cutting-edge technologies, creating enormous industrial opportunities for the future, including for export.
Low Carbon Contracts Company CEO Neil McDermott said:
We support new low carbon energy projects through the CfD program since its inception, so we are extremely excited to see what the next allocation cycle will bring. The stream CfD the portfolio includes projects located across Great Britain, including some of the largest offshore wind farms in the world to date.
We have seen the impact of the program on diversifying and increasing the investments needed to support vital new low carbon energy, and this year COP26 only underscored the critical moment in this cycle.
We have learned a lot so far and are ready to support the ambitious infrastructure that will fuel the UK’s transition to net zero emissions by 2050, as well as protect the long-term health of our environment, our economies and our societies.
Key points (budgets Â£ in 2011/2012 prices):
Pot 1: Established technologies (including onshore wind, solar and hydroelectricity):
- Â£ 10million budget
- Maximum capacity of 5 GW
- maximum capacity limits of 3.5 GW imposed on both onshore wind and solar PV
Pot 2: Less established technologies (including floating wind, tidal current, geothermal and waves):
- Â£ 75million pot budget
- no capacity limit
- out of the total Â£ 75million, Â£ 20million in funding earmarked for tidal stream projects and Â£ 24million in funding originally earmarked for floating offshore wind projects
Pot 3: Offshore Wind:
- Â£ 200 million budget
- no capacity limit
The last round of the CfD This program supports the Prime Minister’s ten-point plan for a green industrial revolution, which outlines an ambitious vision for a low-carbon future for the UK, and will ensure that clean energy continues to play a key role in bringing end of our contribution to climate change in 2050.
Notes to Editors
- the fourth round of the Contracts for Difference award will close applications on January 14, 2022, with final auction results to be announced in spring-summer 2022
- Contracts for difference are 15-year private law contracts between renewable electricity producers and the Low Carbon Contracts Company (LCCC), a public company that manages CfD at arm’s length from the government
- contracts are awarded in a series of competitive auctions, called award rounds, which take place approximately every 2 years. In the auction process, the lowest price bids in each pot and / or close are successful, which promotes efficiency and lower costs
- CfD provide greater certainty and income stability to power producers by reducing their exposure to volatile wholesale prices, while protecting consumers from paying higher costs when electricity prices are high
- the program generated substantial new investments and contributed to significant reductions in capital costs for certain renewable technologies
- CfDauctions (as well as the tailor-madeCfDcontracts signed at the start of the program) have so far awarded contracts to around 13 GW of offshore wind power and around 16 GW of new renewable electricity capacity in all technologies in 58 projects
- The monetary support estimates (pot budget) in this notice, including the total amount of Â£ 285million and spread over the 3 pots, are presented at 2011/2012 prices in accordance with the low carbon tax check. These numbers are an estimate of annual support in the most expensive year in the first 4 years after deployment. Actual annual figures will vary during the term of the contract depending on future wholesale electricity prices and the results of the competitive auction process
Information on the methodology underlying the “households fed” estimates:
- the estimate of “8 million households” is based on the estimate of the pipeline authorized for offshore wind power (around 7 GW). The actual production guaranteed by this allocation round will vary depending on the outcome of the competitive auction process and given the large number of other technology projects competing in the round.
- this was calculated using load factor estimates for commissioning offshore wind in 2025 from the published BEIS 2020 production cost report and published estimates of average electricity consumption Household
- above all, wind power generation is intermittent – it is not possible to continuously power a house only with the wind