UK government announces second round CfD results
The Department for Business, Energy & Industrial Strategy (BEIS) has announced that eleven new energy projects worth up to GBP 176 million (≈ EUR 200.25 million) per annum have been successful in the latest Contract for Difference (CfD) competitive auction round for renewable power technologies. Combined the projects represent over 3.3 GW of new installed electricity capacity to be delivered from 2021.
According to a statement, the competitive approach is continuing to drive cost reductions in the renewable energy industry – the cost of new offshore wind projects starting to generate electricity from 2022-23 are now 50 percent lower than the first auction held in 2015.
The other successful technologies, advanced conversion technologies and dedicated biomass with combined heat and power (CHP), also achieved significant savings. Competition has also driven down the costs for consumers. The capacity delivered in this auction cost up to GBP 528 million (≈ EUR 600.75 million) per annum less than it would have in the absence of competition.
The eleven projects, of which six are advanced conversion technologies and two are dedicated biomass with combined heat and power (CHP) representing 64.31 MW and 85.64 MW of installed capacity respectively, are to be delivered across the UK from 2021.
We’ve placed clean growth at the heart of the Industrial Strategy to unlock opportunities across the country while cutting carbon emissions. The offshore wind sector alone will invest £17.5 billion (≈ EUR 19.91 billion) in the UK up to 2021 and thousands of new jobs in British businesses will be created by the projects announced today. The UK has the largest offshore wind capacity in the world and low carbon businesses have a combined turnover of £43 billion (≈ EUR 48.92 billion), employing 234 000 people.
This government will continue to seize these opportunities as the world moves towards a low carbon future and will set out ambitious proposals in the upcoming Clean Growth Plan. This investment will help the UK meet its climate targets while supporting jobs in Britain’s growing renewable industry, said Richard Harrington MP, Minister for Energy and Industry.
A Contract for Difference (CfD) is a private law contract between a low carbon electricity generator and the Low Carbon Contracts Company (LCCC), a government-owned company, introduced as part of the now implemented Electricity Market Reform (EMR) programme. A generator party to a
A generator party to a CfD is paid the difference between the ‘strike price’
– a price for electricity reflecting the cost of investing in a particular low carbon technology– and the ‘reference price’– a measure of the average market price for electricity in the UK market. It gives greater certainty and stability of revenues to electricity generators by reducing their exposure to volatile wholesale prices, whilst protecting consumers from paying for higher support costs when electricity prices are high.