Fourth CfD round will be the biggest yet
The fourth round of the government’s Contracts for Difference (CfD) scheme will provide £265mn per year to renewables developers and aims to double the amount of renewable electricity capacity that was secured in the third round. It is expected eventually to generate more than the previous three rounds combined. This includes £200mn to support offshore wind projects.
The CfD scheme is the government’s primary method of encouraging investment in low-carbon electricity in Great Britain. It incentivises investment in renewables by protecting developers of projects with high upfront costs and long lifetimes from volatile wholesale prices. This in turn ensures that consumers don’t pay increased costs when electricity prices are high.
CfD contracts are allocated through a competitive auction process, where the cheapest projects in each technology group are awarded contracts first.
The CfD scheme is the government’s primary method of encouraging investment in low-carbon electricity in Great Britain. It incentivises investment in renewables by protecting developers of projects with high upfront costs and long lifetimes from volatile wholesale prices. This in turn ensures that consumers don’t pay increased costs when electricity prices are high.
CfD contracts are allocated through a competitive auction process, where the cheapest projects in each technology group are awarded contracts first.
The emphasis on offshore wind will help meet the manifesto commitment to ensure the UK has 40 GW of capacity by 2030, says the Department for Business, Energy and Industrial Strategy (BEIS). There will also be £55mn available for supporting emerging renewable technologies; £24mn of that ringfenced for floating offshore projects for the first time.
For the first time since 2015, established technologies, including onshore wind and solar, will also be able to bid. The government is seeking up to 5 GW of capacity from these technologies, with a £10mn budget.
The previous round of the CfD scheme delivered record-low prices and secured enough clean energy to power over 7mn homes, says BEIS. The scheme’s competitive design also protects consumers and, thanks to the investment of successive governments, the price of offshore wind has been reduced by around 65%. These costs continue to fall, with solar and wind now cheaper than coal and gas in most of the world, says BEIS.
The announcement establishes government support that will be available for renewable projects, along with levels of electricity generation capacity expected to be delivered by the fourth CfD round. However, final levels of support and capacity could be higher and will be announced ahead of the round opening in December, adds BEIS.
News Item details
Journal title: Energy World
Countries: UK -
Organisation: Department for Business, Energy & Industrial Strategy
Subjects: Policy and Governance, Renewables, Energy policy, Contracts for Difference
