RenewableUK has published a new report outlining five simple, evolutionary reforms to the current allocation process for the Government’s Contracts for Difference (CfD) scheme, to achieve a revolutionary step-change in the country’s renewable energy deployment.
The CfD scheme is the Government’s main mechanism for unlocking investment in new renewable energy projects, with highly competitive annual auctions for contracts to generate clean power. Since its introduction in 2014, it has been hugely successful in supporting the expansion of homegrown clean energy, securing large volumes of clean power at the lowest cost to consumers.
The most recent Auction Round (AR6), which took place last week and secured 9.6 gigawatts (GW) of new renewable energy capacity across 131 projects, including the world’s largest floating offshore wind farm.
Whilst this result demonstrated that investor confidence in the UK’s offshore wind market has returned after the failure of last year’s auction, which attracted no bids, ambitious subsequent auctions will be absolutely critical to achieving the Government’s clean energy mission.
The report published today, “Revitalising the Contracts for Difference Scheme”, identifies the need for the parameters of the auction to reflect the realities of the market more accurately, including realistic reference prices and load factors. It also urges the Government to provide long-term certainty to developers and the supply chain by setting specific targets for each technology in future auctions, and increasing the length of CfD contracts from 15 to 20 years to reflect the longer lifecycle of modern projects.
Alongside this, the report suggests lowering risks by offering more flexibility on which year developers can deliver their projects, as well as continuing to progress ongoing CfD reforms outlined in the Government’s AR7 & Future Allocation Rounds consultation.
RenewableUK’s Chief Executive Dan McGrail said: “The new Government has set ambitious targets for renewable energy, extending across fixed bottom and floating offshore wind, onshore wind, and solar PV. The industry is ready to work with Government to achieve these, and the reforms set out in this new report outline practical steps to provide long-term assurance to developers and the supply chain, whilst building on returning investor confidence following this year’s encouraging auction results.
“Several of the proposals can be implemented without major legislative reform in time for the next auction round in 2025, reducing costs whilst ensuring we procure increasing levels of new renewable energy as we look towards 2030 and beyond on our journey to becoming a clean energy superpower.”
