The auctions, which start today (Thurs), will result in only the most competitive projects winning contracts – helping to drive down the cost of renewables support.
Projects are set to compete for £325 million in support from new Contracts for Difference (CFD) – an increase of £25 million from the budget published in October. This year’s CFD budget is split between technology categories, enabling both established and less established technologies to access support.
The extra funding will increase the amount available for less established technologies, such as offshore wind and some biomass technologies, to £260 million. This will help to bring forward a diverse mix of low carbon energy supplies to help build a new generation of clean, reliable electricity supplies.
Contracts for Difference, which provide long-term certainty for investors, are a cornerstone of the Government’s reforms to the electricity markets, designed to drive investment in a new generation of clean, secure electricity supplies.
The projects that win the auction will receive 15 year contracts – meaning that the total spend per year for contracts allocated in the first allocation round will be up to £325m.
UK Energy Secretary Edward Davey said: “The high demand for contracts shows that we’re one of the top places for renewables investment, and the best place in the world for investing in offshore wind.
“Renewable electricity generation and investment have both more than doubled since 2010. We attracted a record breaking £10 billion worth of investment in 2014 and by making projects compete for support, we’re ensuring consumers get the best possible deal as well as a secure and clean power sector.”
The Renewable Energy Association – the largest in the UK – welcomed the £25 million of extra funding for ‘less established’ technologies bidding in the first CfD allocation round.
But Frank Gordon, REA policy analyst, added: “However, there remain concerns around CfD policy, particularly for independent generators and other established and cost effective technologies such as solar and biomass which must be addressed by the next Government following the election.”