By DARA BUTTERFIELD
The results of the government’s ‘green energy auction’ – which awarded £315 million in contracts to generate over 2GW of renewable electricity – have been welcomed by the chief executives of both the Renewable Energy Association and RenewableUK.
The contracts were offered to five renewable technologies, onshore wind, solar, offshore wind, energy from waste, and advanced conversion technologies.
This included two offshore wind farms, which could deliver over 1.1GW of new capacity, 15 onshore wind projects and 5 solar projects. The clearing price for solar came in at up to 58% lower than the price would have been without competition, offshore wind at up to 18% lower and onshore wind at up to 17%.
Energy & Climate Change Secretary, Ed Davey, claimed competition caused the capacity to cost £110 million per year less that usual. He said: “This world leading auction has delivered contracts for renewables projects right across the UK. These projects could power 1.4 million homes, create thousands of green jobs and give a massive boost to home-grown energy while reducing our reliance on volatile foreign markets.
“The auction has driven down prices and secured the best possible deal for this new clean, green energy.”
Maria McCaffery, Chief Executive, RenewableUK, commented: “We are pleased to see these projects, which between them could power over a million homes, and create substantial numbers of jobs, and much needed investment in our communities, moving forward.
“The highly competitive prices achieved during this Auction, highlight the fact that the industry has been working hard to bring costs down, both onshore and offshore. The prices achieved by the onshore industry show what utter folly it would be to choke off this low cost form of low carbon power and the results also demonstrate that the offshore industry, provided the conditions are maintained, is well on the path to achieving its stated aim of £100/MWh by 2020.
“However, there remains a lot of work to be done to ensure that developers remain committed to the UK market, bringing forward much needed power, and economic benefits.
“It is vital that the new Government moves quickly to clarify process around the next awards. A level of certainty about both immediate future allocation rounds, but also the long term vision of decarbonised electricity, and the support needed for it, will ensure projects keep coming forward, at the right price.
“The industry has really extended itself on the cost reduction agenda, and Government needs to respond positively with a clear signal about future rounds and long term support, to enable the continued development of low carbon power at a good price”.
The next round of auctions is due to take place in the autumn of 2015, and McCaffery warned that all political parties aiming to be in Government needed to consider how these should function.
Dr Nina Skorupska, Chief Executive, REA, said: “This is a significant milestone for the long-standing Electricity Market Reform (EMR) and CfD policies and it is positive that the first allocation round has been completed on time.
“The procurement of significant renewables capacity is beneficial to the UK in terms of meeting our legally binding renewable energy targets in a cost-effective manner, improving energy security and delivering jobs and investment.
“We have longstanding concerns regarding the CfD policy and are engaging with Government on these in the lead up to future allocation rounds. Today’s results show many of these concerns are still valid, for example regarding emerging technologies. That said, it is positive that a wider spread of technologies than anticipated was awarded contracts.
“If we have one overarching message to Government it would be that industry needs a stable policy framework in the coming years and that energy is too important to play politics with at the coming election.”
This is the first allocation round for CFDs, and available funding for CFDs for renewables and carbon capture and storage in future years will could rise to over £1 billion per year by 2020/21. The budget for the next allocation round will be confirmed later this year – £50 million more has already been indicated for established technologies.