The UK is set to miss out on investment in renewable energy projects and manufacturing contracts under latest government plans.
RenewableUK is warning that the plans set out today by the government for this year’s round of auctions for contracts to generate clean power (Contracts for Difference) will not maximise investment in wind, solar and tidal projects.
The trade association is calling for Whitehall to revise the £205m CfD budget so that the industry can stay on track to deliver on its renewable energy targets.
RenewableUK’s Economics and Markets Manager Michael Chesser said: “Unfortunately, in the light of global inflationary pressures, the budget and parameters set for this year’s CfD auction are currently too low and too tight to unlock all the potential investment in wind, solar and tidal stream projects which the industry could deliver.
“Concerns about energy bills and energy security are at a record high, so the UK should be trying to maximise investment in low-cost clean energy, to provide relief for billpayers who’ve been hit hard by massive spikes in global gas prices over the past year.”
According to Cornwall Insight, developers are becoming “increasingly concerned” about bidding for projects in the next round of the government’s Contracts for Difference (CfD) renewables subsidy scheme, fearing they may not get a return on any investments they make.
Data from Cornwall Insight’s report into capital costs and their impacts on the government’s fifth round of the Contract for Difference (CfD) scheme, has shown rising inflation and interest rates, supply chain problems, and labour shortages have increased the weighted average cost of capital (WACC) for renewable projects by about 4% since early 2021.
Chesser added: “At a time when the US and EU are bending over backwards to offer incentives for renewable energy developers to come to them to build new projects, the UK is sending the wrong investment signals.
“As a result, we risk losing vital opportunities to scale up our supply chains around the UK, denying communities the industrial-scale benefits which our sector offers.
“We’re also jeopardising our global lead in cutting-edge clean energy technologies like floating wind and tidal stream.”