Scottish Renewables has cautiously welcomed results of today’s Contract for Difference (CfD) Round 4 auction, which saw projects in Scotland and England UK securing record low prices to sell their power.
Scottish Renewables CEO Claire Mack said the prices achieved today “showed how competitive renewable energy can be with the right government support”.
She added: “It is important that government understands the reality of building projects at these very low prices.”
Out of a total of 11GW, the CfD4 auction will 3GW of clean energy for Scotland, with tidal power projects winning contracts for first time.
Offshore, two projects off Scotland’s east coast won CfDs in a competitive UK Government auction process, at just £37.35 per megawatt-hour, 6% cheaper than in previous auctions.
Onshore wind re-entered the energy market seven years after a ban saw projects stalled.
Wind projects on Scotland’s remote islands also won contracts which will help make the case for new cables, further adding to the economic benefits delivered by renewables in Scotland.
Tidal power is also now competing in annual auctions, with 35MW of projects in Caithness and Orkney and 5MW in Wales granted contracts today.
Mack said: “Scotland’s offshore wind potential was outlined by the recent ScotWind round, through which 17 projects received seabed leases … While these results are positive for Scotland it is important that government understands the reality of building projects at these very low prices.
“Industry has said for many years that it is committed to investing in the UK supply chain, where prices are generally higher.
“Doing so is made much harder by the need to drive down costs in the Contracts for Difference mechanism’s competitive auction process and we would urge government to consider CfD reform away from pure cost reduction to ensure that resilience and sustainability can be embedded in the UK supply chain.”
At the price achieved today (£178.54/MWh), tidal power is able to compete with other energy generation technologies – but industry body Scottish Renewables warned more must be done to ensure the sector’s future.
Mack said while the prices achieved in this most recent auction are an “incredible milestone”, tidal energy is still in a developmental phase and most developers will be unable to bid so low in future.
“We would therefore urge the UK Government to confirm that its plans for future auction rounds include a dedicated, ring-fenced budget for tidal stream projects and also to commit to reforming the Contracts for Difference mechanism to allow UK supply chain companies to be more competitive.”