The UK authorities has elevated the price range for the sixth Contracts for Difference (CfD) public sale by half. Additional allocations embrace thousands and thousands of kilos for applied sciences akin to photo voltaic and onshore wind, however offshore wind enjoys the lion’s share of the price range.
The UK authorities has set a record-breaking price range for the subsequent renewable power public sale, with greater than GBP1.5 billion ($2 billion) accessible for allocation. An further GBP530 million has been added to the Contracts for Difference (CfD) price range by the newly elected Labor authorities. It claims the extra funding will speed up the deployment of wind, photo voltaic and different renewables.
When the price range for the sixth CfD public sale was introduced on 6 March 2024 it consisted of GBP1 billion divided between three pots. Pot 1 for established applied sciences, akin to photo voltaic and onshore wind, amounted to GBP120 million; Pot 2 for brand new applied sciences, akin to tidal and floating offshore wind, is allotted GBP105 million; whereas the third and largest pot is allotted GBP800 million, allotted for offshore wind. Under the revised price range introduced on 31 July 2024, an extra GBP65 million will go to Pot 1, GBP165 million to Pot 2, and an extra GBP300 million to Pot 3.
CfDs have been a key a part of the UK’s renewable power technique for the reason that first spherical of allocations opened in 2014. The sixth CfD public sale formally opened on 27 March 2024 beneath the earlier authorities and has the very best price range on file on the time.
For a UK venture to acquire a CfD, builders who meet the eligibility necessities should submit sealed bids. CfD contracts are allotted first to the most affordable eligible tasks, though some applied sciences could also be given first entry to particular elements of the price range – for instance, tidal tasks have first precedence. entry to part of the Pot 2 price range within the sixth CfD public sale. Successful builders within the public sale will likely be awarded a contract by the state-owned Low Carbon Contracts Company (LCCC). They will likely be given a flat price for the electrical energy they produce for 15 years. Successful bidders are anticipated to obtain notification from the electrical energy system operator later in 2024.
In the sixth spherical of CfD, the value ceiling is about at GBP61/MWh for photo voltaic, GBP73/MWh for offshore wind and GBP64/MWh for onshore wind. Emerging applied sciences akin to geothermal, tidal and floating offshore wind have increased break-even costs, set at GBP157/MWh, GBP176/MWh, and GBP261/MWh, respectively.
In a press release, Mark Sommerfeld, deputy director of coverage on the Association for Renewable Energy and Clean Technology (REA), described the rise within the CfD price range as a “essential step” in direction of a secure, reasonably priced and decarbonized system. of electrical energy.
“It is reassuring to see the brand new authorities shifting at velocity, getting the UK again on monitor and serving to to safe extra new onshore wind and photo voltaic capability, specifically. These are the bottom value type of energy era, whereas additionally serving to to underwrite UK provide chains, abilities and jobs,” he stated.
Sommerfeld added that the REA want to see the federal government take away the caps on the cash rising applied sciences akin to geothermal can obtain by CfD auctions. “This is essential to delivering a various and resilient electrical energy system for the UK.”
Sam Hollister, head of coverage and funding at UK consultancy LCP Delta, additionally welcomed the elevated CfD price range and highlighted the numerous enhancements it might make to the allocation of onshore wind.
“With the welcome enhance within the price range, we might see the quantity of onshore wind captured on this public sale enhance to someplace between 5.5 – 9 GW, relying on clearing costs. The UK is now has 14GW of offshore wind within the system, with an extra 13 GW of CfD capability already in growth. If the UK is to succeed in its 55 GW goal by 2030, this yr’s CfD public sale ought to goal 9 GW a minimum of, with the hope of getting extra allocation within the subsequent two years,” he stated.
Hollister added that greater than doubling the Pot 2 price range sends a robust sign to rising applied sciences, which within the United Kingdom primarily means offshore wind.
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