Energy secretary Grant Shapps has responded to developers’ criticism, and found an inflation-matching sum of £22 million, to boost this autumn’s latest round in clean power’s vital Contracts for Difference (CfD) regime.
Five months ago, green energy trade body Renewables UK had slammed as too low the £205 million AR5 pot set in Jeremy Hunt’s budget.
Beginning in 2014, the CfD system of reverse auctions – initially held every two years – has succeeded in taking an axe to costs of low-carbon electricity before it reaches the UK grid. With the auctions now doubling in frequency to become annual events, bidding in AR5, the latest, starts this autumn.
Recent studies have pointed to waning confidence among developers in Britain as a destination for renewable energy investment. That is the view of a report released this week by power lobby group EnergyUK, and commissioned from Oxford University economists.
Yesterday Shapps offered reassurance to power and energy company chiefs, in a round-table meeting in London. Today’s announcement puts cash behind the minister’s words.
The minister’s new money for AR5 sees:
- Established technologies such as solar and offshore wind receiving another £20 million, now totalling £190 million;
- An extra £2 million – now at £37 million – for turbines floating offshore and other emerging technologies
- An unchanged £10 million for tidal stream projects
Last year, renewable technologies including hydro accounted for 42% of electricity generation, up from 7% cent in 2010. 2023’s first quarter saw that share advance to 43%, with July peaking at 51%.
Against complaints intensifying this week of the Sunak government losing credibility around its 2050 ambitions for Net Zero on the back of expanded N Sea oil extraction, ministers believe they’re on track to deliver a decarbonised power sector by 2035.
Both promises were repeated in April in the latest version of the Conservatives’ Powering Up Britain plan.
Shapps framed his concession as enhancing Britain’s energy security.
“Putin’s barbaric action against Ukraine made clear our need to do whatever it takes to bolster our energy security“, said the secretary of state.
“Today’s funding through our flagship Contracts for Difference scheme – the lifeblood of our renewables industry for nearly a decade – will help grow our economy by making Britain the first choice for investors in renewable energy projects and secure skilled jobs for future generations.
“Along with our backing for oil and gas, carbon capture and our revival in nuclear, we will ensure we can help power more of Britain from Britain for decades to come.
An arms-length entity, the Low Carbon Contracts Company, oversees funding streams for 98 CfD contracts, 30% of them supporting projects in Scotland.
Its CEO Neil McDermott said: “The £22 million boost to CfD AR 5 reaffirms the government’s commitment towards transforming Britain into a global leader in renewable energy. Contracts for Difference plays a crucial role in enhancing energy security, driving economic prosperity and propelling us towards a more sustainable future”.
Critical last year when the original AR5 pot was announced, today the Renewable Energy Association greeted the concession.
Mark Sommerfeld, its deputy director of policy, said: “The government has sent a welcome signal that it is still committed to accelerating the deployment of renewable energy.
“The additional £20million for established technologies and extra £2million for emerging technologies will help provide confidence to successful projects in this upcoming Contract for Difference allocation round that they will be able to build out, even in the face of the current difficult economic climate.
“This is a positive step in contributing to the domestic renewable capacity that the UK desperately needs”, Sommerfeld added.
Tidal stream and floating turbines both use turbines to generate electricity, so it is not clear from this report if “floating turbines” mentioned are just floating wind turbines or do they include floating ocean current, (tidal stream) turbines?
Assuming that the floating turbines quoted are just wind turbines, it is regrettable that they do not include floating tidal stream turbines that are well proven over more than 10 years and run 24/7 unlike wind turbines that only run when the wind blows and may need to be shut down in storms. Tidal stream turbines, floating or anchored on the ocean floor, provide vital base-load power and the UK has many powerful tidal currents around our coast, and they are not as visually obtrusive as wind turbines and are easier to maintain than offshore wind turbines. It is therefore regrettable that tidal stream turbines will not receive increased government support. Note that tidal stream turbines do not capture wave energy.