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United Kingdom : World-leading auctions for low carbon projects to begin in UK
Publish Date : 30-Jan-2015
The government is making an extra Ł25 million of funding available in world leading auctions for low carbon support, following high levels of demand for contracts. The auctions, which will start on 29 January, will see only the most competitive projects receive contracts – helping to drive down the cost of renewables support.
Projects are set to compete for Ł325 million in support from new Contracts for Difference (CFD) – an increase of Ł25 million from the budget published in October. This year’s CFD budget is split between technology categories, enabling both established and less established technologies to access support.
The extra funding will increase the amount available for less established technologies, such as offshore wind and some biomass technologies, to Ł260 million. This will help to bring forward a diverse mix of low carbon energy supplies to help build a new generation of clean, reliable electricity supplies. Energy and Climate Change Secretary Edward Davey said: “We are transforming the UK’s energy sector, dealing with a legacy of underinvestment to build a new generation of clean, secure power supplies that reduce our reliance on volatile foreign markets.
“The high demand for contracts shows that we’re one of the top places for renewables investment, and the best place in the world for investing in offshore wind. “Renewable electricity generation and investment have both more than doubled since 2010. We attracted a record breaking Ł10 billion worth of investment in 2014 and by making projects compete for support, we’re ensuring consumers get the best possible deal as well as a secure and clean power sector.”
Due to high levels of demand for contracts, projects will be required to compete for support. As a result, the contracts will deliver new capacity more cheaply than through the previous arrangements, resulting in lower bills. It’s estimated that the reforms to the electricity markets will mean that average annual household electricity bills are around Ł41 lower over the period 2014 to 2030 than decarbonising without these changes. Contracts for Difference, which provide long-term certainty for investors, are a cornerstone of the Government’s reforms to the electricity markets, designed to drive investment in a new generation of clean, secure electricity supplies.
The projected spend of the budget remains within the Levy Control Framework, which caps the costs to consumers of government energy policies. The budgets for next year’s auction will be confirmed this autumn, but Ł50 million more has already been indicated for established technologies. Further funding is planned to be available for CFDs for renewables and carbon capture and storage in future years, rising to over Ł1 billion in 2020/21.
