Renewable energy groups have welcomed news today that the UK Government is adding £22m to the budget for the round five (AR5) of the Contracts for Difference (CfD) auction.
Responding to today’s announcement by the Secretary of State for Energy Security and Net Zero Grants Shapps of the increase, RenewableUK’s Executive Director of Policy Ana Musat said the increase is welcome, particularly given the industry’s concerns that the budget published initially was £80m lower than last year, potentially limiting the number of viable renewable energy projects able to secure a contract to generate clean power.
Musat said: “At a time when the UK is investing heavily in energy security and looking to create additional economic opportunities by growing the renewables supply chain, it’s essential that we have a consistent pipeline of projects.
“An increased CfD budget can help, but the most important step government could take to encourage investment in this growing sector would be to ensure that we have sustainable pricing in future auctions, which take into account the difficult economic circumstances faced by the sector.
“Setting artificially low prices will deter investment, reduce our pipeline and limit the UK’s ability to stay ahead in the global race for renewable energy capital, skills and supply chain investment.”
Mark Sommerfeld, Deputy Director of Policy at the Association for Renewable Energy and Clean Technology (REA), said:
“The Government has sent a welcome signal that it is still committed to accelerating the deployment of renewable energy.
“The additional £20m for established technologies and extra £2m 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.”
Andrew MacNish Porter, Policy Manager at Scottish Renewables, said that while the announcement of a budget increase is welcome it still falls “far short” of what’s needed to support renewables build out.
MacNish said: “While the sums mentioned may seem large, they are simply not enough to unlock the £50-60bn capital investment which will be required each year to deliver on the UK’s net zero ambitions through the late 2020s and 2030s and the £1.1tn which the Office for Budget Responsibility projects the UK will save by 2050 if it reaches net-zero.
“Going forward, the UK Government must ensure it properly funds the CfD mechanism to maximise the deployment of the low-cost, home-grown renewable energy projects we need to end our reliance on expensive imported gas and tackle climate change.”