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REA – CfD blocks support for most cost-effective renewable technologies

UK Energy Minister Richard Harrington MP recently confirmed that GBP 557 million (≈ EUR 626.23 million) will be made available for "less established" technologies such as offshore wind, energy from waste, marine and biomass combined heat and power (CHP) for future Contract for Difference (CfD) auctions, starting with the next auction in 2019.

A view of the wood pellet storage silos at Drax Power.

A view of the wood pellet storage silos at Drax Power. In 2016 the European Commission (EC) opened an in-depth investigation, which included feedback from “interested third parties”, to ensure that the proposed CfD for Drax would not lead to overcompensation and undue biomass market distortions. The EC found that the increased demand for wood pellets could be “fulfilled by the market without undue negative side-effects” and that the project’s contribution to increasing the share of renewable energy produced in the UK “outweighs any potential distortions of competition that could be triggered” by the government support.

Commenting on the report, James Court, Head of Policy and External Affairs at the Renewable Energy Association (REA) noted that the last auction showed what government support and consistency can do for an industry, with offshore wind showing “incredible cost reductions”.

Yet we still find ourselves in a situation where the government will support new nuclear, new gas, new diesel, yet won’t support the most cost-effective technologies such as solar, onshore wind and biomass, which are still blocked to market. The energy market is changing rapidly, with cheaper renewables, a more decentralised grid, smart meters and battery storage driving this revolution. Yet the UK will be left behind globally if the government don’t start supporting the industry and we will be left with a higher cost, higher carbon and out of date system that we will all end up paying for, said Court.


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