Offshore wind farm

Contracts for Difference scheme opens to expanded range of technologies

The fourth round of the Contracts for Difference (CfD) will make £285m available for aspiring green energy projects, with more experimental technologies included than in any previous round.

The government hopes to secure 12GW of capacity, the largest amount in the scheme’s history, with the potential to power around eight million homes. This is more capacity than the three previous rounds combined, with additional offshore wind capacity.

The scheme is open to an expanded range of renewable energy technologies: offshore and onshore wind, solar, tidal, and floating offshore. Projects involving these technologies are eligible to bid for a fraction of the funding.

Regarding emerging technologies, £24m has been set aside for floating offshore wind projects and £20m for tidal stream projects. Onshore wind and solar are competing for the first time since 2015, and the government is seeking significant capacity from these technologies to help achieve the required levels of deployment in line with meeting climate change targets.

According to government figures, between the scheme’s first round in 2015, and its third in 2019, it has led to the price per unit of offshore wind falling by 65 per cent.

Kwasi Kwarteng, Business and Energy Secretary, said: “Our biggest-ever renewables opening today will solidify the UK’s role as a world leader in renewable electricity while backing new, future-proof industries across the country to create new jobs. By generating more renewable energy in the UK, we can ensure greater energy independence by moving away from volatile global fossil fuel prices, all while driving down the cost of new energy.”

Greg Hands, the energy and climate change minister, added: “The Contracts for Difference scheme is proof that green and growth go hand-in-hand, as it continues to be a key driver behind the world-leading renewable energy sector that is providing us with secure clean energy, creating jobs across the UK and opening investment and export opportunities.

Neil McDermott, chief executive of Low Carbon Contracts Company, said: “The current CfD portfolio features projects located across the length and breadth of Great Britain, including some of the world’s largest offshore wind farms to date. We’ve seen the scheme’s impact on diversifying and increasing the investment needed to support vital new low-carbon power, and this year’s Cop26 only served to underline the critical timing of this round.”

“We’ve learned a fantastic amount to date and we stand ready to support the ambitious infrastructure that will power the UK’s transition to net-zero emissions by 2050, as well as protecting the long-term health of our environment, economies and societies.”

RenewableUK CEO Dan McGrail said: “This is set to be a landmark auction securing the largest amount of new renewable energy capacity so far, as ministers have listened to our calls for the overall capacity cap to be lifted to reflect the enormous appetite among companies and investors in UK projects. More than 16GW of wind could be ready to compete and over 23GW of renewables overall. We could see investment of over £20bn in this round, creating thousands of jobs and cutting costs for energy consumers.”

“We need a range of renewable technologies to get us to net zero as fast as possible, so it’s great to see the development of innovative floating wind and tidal stream projects supported by ring-fenced funding, as we’ve been advocating. This will enable us to ramp up the roll-out of these cutting-edge technologies, building up massive industrial opportunities for the future, including exports.”

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