The UK government is to put £265m up for grabs to support renewable energy projects in the upcoming Contracts for Difference auction.
Energy department BEIS has allocated offshore wind the lion’s share in the draft budget plan published today ahead of the delayed shoot-out, which is scheduled to open in December.
Some £200m is in the kitty in Pot 3 for fixed-bottom offshore wind projects. Officials have also proposed that the pot have no capacity cap.
Floating offshore wind will be able to bid for £55m in the Pot 2 less-established category, which includes tidal, geothermal and wave. BEIS wants to ringfence £24m for floaters in the pot, which again will feature no capacity cap.
Meanwhile, London has put £10m down for the return of the Pot 1 established technologies category, which will comprise onshore wind, solar and hydropower.
The total capacity cap for this category is 5GW, with both onshore wind and solar limited to a maximum of 3.5GW.
The budget figures are based on 2011-12 prices.
BEIS said the round aims to double the amount of power that was procured in the last CfD round, which concluded in 2019.
CfD4 will not wrap up until the second or third quarter of 2022, despite a government pledge to hold a biennial auction.
Scottish Renewables chief executive Claire Mack said: “This auction comes at a crucial time for the UK’s climate leadership and I’m very pleased to see that greater renewable capacity will be unlocked by what is being set out today, particularly recognising Scotland’s offshore expertise and ambition.
“While we are pleased that a balanced range of technologies will be supported, we are concerned that as little of 1.5GW of onshore wind could be secured, which would fall far short of what is needed to meet net-zero goals.
“We were also hoping that more ringfenced support would be offered to our impressive tidal sector, which stands ready to demonstrate its’ growth potential by deploying at the next level of commercial scale.”
Trade group RenewableUK said the announcement removing the overall cap had been something that industry had previously called for, reflecting the growing appetite from companies and investors in UK projects.
RenewableUK chief executive Dan McGrail said: “Today’s announcement will encourage even greater investment in renewables and is a huge boost for the UK’s green recovery.
“We could see investment of over £20bn on the back of the next clean power auction, which will boost jobs and the UK supply chain, and cut costs for consumers in the transition to net zero.
“The sector had called on government to increase the ambition for new renewable energy capacity at the upcoming auction and that is reflected in today’s announcement.
“In this round we want to see just how low the price of new solar and onshore wind has fallen in the past five years, and make sure that the auction does the heavy lifting to take us towards our 2030 target of 30GW offshore wind.
“There is a huge appetite for investment in floating offshore wind in the UK, it’s a technology that is vital for net zero and which has a truly global potential.
“The dedicated support for floating projects at the upcoming auction will help the UK to compete with the other countries vying for global leadership in this new technology.”
Environmental Audit Committee chairman Philip Dunne MP said: “I am delighted to see that the potential of floating offshore wind and of tidal stream have finally been recognised as contributors to our future low carbon energy mix.
“This support for renewable energy will help net zero Britain, provide welcome demand signals to investors, and give industry the confidence it needs to secure the skills for the future.
“While this investment is extremely welcome, the government must also evaluate the infrastructure supporting renewable energy.
“The investment can only do so much if the infrastructure cannot support the projects hoping to be achieved.
“Our committee has highlighted in our work on technological innovations that the connection of expanding offshore wind farms to the grid must be reviewed and that adequate investment is required for deep water port capacity.”
Energy Minister Anne-Marie Trevelyan (pictured) said: “The Contracts for Difference scheme has helped the UK become a world leader in clean electricity generation and lowered prices for consumers.
“The new plans set out today deliver on the Prime Minister’s Ten Point Plan and will support the next generation of renewable electricity projects needed to power our homes and meet our world-leading climate change targets.”
Final levels of support and capacity could be higher and will be announced ahead of the round opening in December, added BEIS.
Meanwhile, BEIS is also publishing updated guidance for onshore wind projects in England “to ensure local communities are given a more effective voice on local development”. Renewable projects are subject to strict planning controls and the “guidance will ensure communities are engaged with and are able to benefit from renewable infrastructure in their area”.