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UK government accelerates the adoption of renewable energy
16/2/2022
News
Contracts for Difference (CfDs), in which companies bid for government support for new renewable electricity generation, will be held annually instead of every two years, potentially increasing the number of projects entering the electricity system.
March 2023 will see the next CfD round open, the first of the new annual auctions which support new low carbon electricity projects by awarding 15-year contracts between electricity generators and the government’s Low Carbon Contracts Company.
CfDs are the government’s primary method of supporting renewable energy. They have been responsible for bringing down the price per unit of offshore wind by about 65% over the past decade. The most recent allocation round awarded 12 new contracts with the potential for almost 6 GW of additional offshore wind capacity, enough to power over 7mn homes.
Since their inception in 2014, CfDs have supported about 16 GW of new low carbon electricity capacity, the majority of which has been offshore wind.
Increasing CfD round frequency is part of the government’s commitment to achieving a fully decarbonised electricity system by 2035. The decision follows a Department for Business, Energy and Industrial Strategy (BEIS) review which found overwhelming support for more frequent CfD allocation rounds.
Morag Watson, Director of Policy at Scottish Renewables, said: ‘By 2050 demand for electricity will have almost doubled, and the vast majority of that electricity must come from renewable sources if we are to meet net zero. The CfD mechanism plays a central role in facilitating that and increasing the frequency of auctions is essential if we are to tackle climate change.’
The government announcement was followed by more updates to the UK’s renewable energy sector.
Business and Energy Secretary Kwasi Kwarteng has granted a Development Consent Order (DCO) for a major offshore wind project. Located 47 km off the Norfolk coast, Vattenfall’s Norfolk Vanguard wind farm would have a generating capacity of 1.8 GW.
An application for the offshore wind farm project was first accepted for examination by BEIS in July 2018. Now that the DCO has been awarded, supply chain engagement will commence with the construction of up to 158 wind turbines expected to begin in 2023.
Vattenfall was also awarded consent for its Norfolk Boreas offshore wind farm in December 2021, which could produce electricity for almost 2mn homes. Construction for this project will also start in 2023.
