New schedule of renewable energy subsidy auctions set to double UK wind-ustry capacity in 10 years

The renewable wind-ustry has welcomed new plans by the Department for Business, Energy and Industrial Strategy on new auctions to secure renewable energy sources – which mean that the UK’s offshore wind capacity is set to nearly double over the next decade.

UK-Govt. ministers confirmed that the next competitive auction to procure new renewable power capacity which will take place in May 2019, with offshore wind, remote island wind and a range of other projects competing for Contracts for Difference (CfD). 

Claire Perry, Minister for Clean Growth and Climate Change, also declared that further negative subsidy auctions will take place every two years and that auctions will be supported by a budget of £557 million. 

The UK already has just over 7GW gigawatts  of operational offshore wind capacity – the largest amount of any country – and a further 7GW under construction or with contracts secured. 

Perry’s statement of support for an additional 2GW of offshore wind per year in the 2020s could deliver up to 16GW of new capacity, which would generate approximately 20% of UK power. In 2017, offshore wind generated 6% of UK power.

Her announcement follows last year’s successful renewables subsidy auction which saw the cost of power from new offshore wind farms fall by 50%, making it one of the cheapest options for new power in the UK – and even lower than the cost of new gas and nuclear power plants.

Contracts for Difference/ subsidy auctions are awarded using a competitive auction to determine a fixed price for power produced for a period of 15 years.

The last CfD auction covered projects delivering up to 2022-23. New auctions announced today are expected to support up 2GW of new capacity per year to 2030.

1GW of offshore wind powers just over 1 million homes. 16GW of new offshore wind capacity would generate 67TWh, using the government’s latest 47.7% load factor. Total UK electricity generation in 2017 was 338TWh.

 The announcement was widely welcomed by the UK wind-ustry, with Paul Cooley, SSE’s Director of Generation Development, speaking for many when he said: 

 “We welcome the announcement from BEIS confirming that the next Contracts for Difference auction will take place in May 2019. The Government’s guarantee that auctions will be held every two years from 2019 onwards provides much needed certainty for the UK’s offshore wind industry. “

Hugh McNeal, chief executive of Renewable UK, said: “This is a ringing endorsement by government of the UK’s world-leading offshore wind industry and its ability to deliver for consumers, businesses and industry. 

 “Boosting our ambitions for offshore wind is win-win for consumers, as the industry’s success at cutting costs mean that offshore wind is now one of the cheapest options for new power in the UK.

 “This announcement confirming the budget and timing of new auctions, sets us on the path do deliver the tens of billions of pounds of investment that will be needed to meet our ambition of at least 30GW by 2030. 

 “This is good news for domestic supply chain which can look forward to a pipeline of new offshore wind projects that will support tens of thousands of jobs across the UK.

 “This is also an important boost for remote island wind, which like other renewables, is popular with the public and is a unique economic opportunity for island communities”.

24 Jul 2018

Pixie Energy

Pixie logo Pixie Energy is an incubator and a facilitator of strategic research and project work, focusing on energy regulation, policy and markets at the local and national level. Find out more about Pixie Energy here.

Local Energy Matters: Scotland

Local Energy Matters: Scotland is a free-to-download brochure with a focus on energy tariffs in the two Scottish electricity distribution regions, as well news on local energy and low-carbon schemes.

Previous editions can be download here.

Scottish energy market overview

You can read an overview of the Scottish energy market here.

Scottish Government energy feed