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Biggest ever renewable energy support scheme opens

Biggest ever renewable energy support scheme opens

The fourth round of the Contracts for Difference (CfD) scheme which aims to secure 12GW of electricity capacity opens with £285 million a year funding for low-carbon technology.

The biggest ever round of the UK government’s flagship renewable energy support scheme is opening to applications today (Monday, 13 December), with £285 million available a year for building the next generation of Great Britain’s green energy projects.

Renewable energy projects across Great Britain can now bid for funding in the fourth round of the Contracts for Difference (CfD) scheme, which is aiming to secure 12GW of electricity capacity – more renewable capacity than the previous 3 rounds combined. The additional offshore wind capacity resulting from the funding alone could generate enough electricity to power around 8 million homes.

Compared to the previous round, this is open to an expanded number of renewable energy technologies, with offshore wind, onshore wind, solar, tidal and floating offshore wind projects, amongst others, all eligible to bid for funding in the scheme’s auction process – this will ensure we have a more secure, more resilient energy system and support the UK’s transition to net zero through a greater range of energy sources.

The competitive nature of the CfD scheme has been hugely successful in driving the deployment of renewable energy across Great Britain whilst rapidly reducing costs. The scheme’s design has led to the price per unit of offshore wind to fall by around 65% between the first allocation round (AR) in 2015 and the third in 2019.

Business and Energy Secretary Kwasi Kwarteng said “Our biggest ever renewables auction opening today will solidify the UK’s role as a world-leader in renewable electricity, while backing new, future-proof 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, all while driving down the cost of new energy.”

A total budget of £285 million a year has been allocated to the fourth round, with £200 million available for offshore wind, £75 million for emerging technologies, such as remote island wind, tidal stream and floating offshore wind, and £10 million for established technologies, such as solar and onshore wind.

Within emerging technologies, £24 million a year has been ringfenced for floating offshore wind projects and £20 million initially set aside for tidal stream projects, demonstrating the government’s support for new, innovative technologies that can make an important contribution to the UK’s decarbonisation commitments.

The £20 million per year support for tidal stream projects represents the biggest investment into tidal power in a generation, kickstarting a brand-new chapter for the tidal industry that could also have the benefit of creating jobs across the UK.

Onshore wind and solar are competing in an allocation round for the first time since 2015, and the government is seeking significant capacity from these technologies which will help us achieve the required levels of deployment in line with meeting climate change targets.

Subject to the outcome of the competitive auction, it is expected that AR4 will be a major step towards delivering the government’s increased ambition to have 40GW of offshore wind by 2030, including 1GW to come from floating offshore wind, as set out in the Ten Point Plan for a Green Industrial Revolution.

Energy and Climate Change Minister Greg Hands said “The Contracts for Difference scheme is proof that green and growth go hand-in-hand as it continues to be a key driver behind the world-leading renewable energy sector that is providing us with secure clean energy, creating jobs across the UK and opening investment and export opportunities.”

There has also been a strengthening of the supply chain plan process, so the CfD’s fourth round can support the effective development of open and competitive supply chains and promote innovation and skills in the low-carbon electricity generation sector.

Key points (£ budgets in 2011/2012 prices):

Pot 1: Established technologies (includes Onshore wind, Solar and Hydro):

  • £10 million pot budget
  • 5GW capacity cap
  • maximum capacity limits of 3.5GW imposed on both onshore wind and solar PV

Pot 2: Less-established technologies (includes Floating Offshore Wind, Tidal Stream, Geothermal and Wave):

  • £75 million pot budget
  • no capacity cap
  • within the £75 million total, £20 million ringfenced funding for tidal stream projects and £24 million initially ringfenced funding for floating offshore wind projects

Pot 3: Offshore wind:

  • £200 million pot budget
  • no capacity cap

The latest round of the CfD scheme supports the Prime Minister’s Ten Point Plan for a Green Industrial Revolution, which outlines an ambitious vision of a low-carbon future for the UK, and will ensure that clean energy continues to play a key role in ending our contribution to climate change entirely by 2050.

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