Joy has broken out in Britain’s renewables sector, in reaction to D-BEIS committing yesterday to double its frequency of Contracts for Difference (CfD) auctions to once a year, in a bid to speed up more clean generation at ever lower cost.
D-BEIS announced CfDs will be stepped up from their current two-yearly cycle, starting from March 2023.
Since their institution in 2014, low-balling CfD auctions held every two years – and their resulting Allocation Rounds – have set minimum “strike” prices for power generated by emerging technologies, all of them low in carbon.
Encouraging developers thus with a market-derived support mechanism has succeeded in slashing output costs of clean power’s emerging technologies. Wind-made electricity generated around Britain’s coasts has been the biggest beneficiary, its output now being 65% cheaper than only eight years ago.
In consequence, the UK leads the world in the technology, with around 15GW of marine turbines already built or approved, towards 30 GW sought by2030.
Ministers claim that eight years of CfDs have attracted record private investment to boost jobs and production in clean energy. They seek a cumulative total of £ 90 Billion by 2030.
Only two months ago, as Allocation Round 4 attracted 6GW of new clean capacity via 12 new contracts, did Whitehall admit solar PV for the first time to utility-scale CfD bidding. Officials were responding to long-standing charges of incomprehension and discrimination from the clean technology’s backers.
Energy secretary of state Kwasi Kwarteng said: “We are hitting the accelerator on domestic electricity production to boost energy security, attract private investment and create jobs in our industrial heartlands”.
“Huge appetite” of renewables developers to invest more
“The more clean, cheap and secure power we generate at home, the less exposed we will be to expensive gas prices set by international markets”, the energy secretary added.
For wind power developers, RenewableUK’s Dan McGrail hailed annual CfD auctions as a major step in “our nation’s transition to net zero”.
“It’s good news for consumers too, as it means the UK will be reducing its vulnerability to volatile international gas prices and increasing the volumes of low cost renewable energy in our energy system.
“There’s a huge appetite among renewable energy developers to invest in building more projects, which will help to grow the UK supply chain at a faster rate. This will enable us to maximise the economic benefits which this sector offers to everyone, especially in parts of the country which urgently need levelling up.
Every year Britain needs to add up to 4GW of new offshore wind capacity, quadrupling the current rate, McGrail added, to stay on track for net zero. Similar increases in onshore wind, solar and other clean power sources were vital too, as well as ramping up the roll-out of innovative technologies like floating wind, green hydrogen and marine power.