16 Mar UK confirms £205 million budget to power more of Britain from Britain
Britain’s rollout of clean, affordable, home-grown energy is moving full speed ahead, with the UK government offering £205 million in its latest renewables auction, boosting energy security, growing our economy and powering more of Britain from Britain.
The Contracts for Difference (CfD) scheme is the government’s flagship mechanism for supporting new British low-carbon electricity generation projects, so far awarding contracts to projects totalling nearly 27GW of low carbon capacity. This has helped accelerate plans to diversify, decarbonise and domesticate our energy supplies, with the last round (AR4) securing almost 11GW of low carbon capacity – enough to generate sufficient electricity to power 12 million British homes.
Today’s announcement of a budget of £205 million for the fifth CfD allocation round – which is the first CfD auction to run annually – confirms another year of significant financial backing by government for green industries and jobs. This will bolster investment into the sector every year, helping to support green energy and jobs of tomorrow, level up Britain, and replace expensive fossil fuels with cheaper, cleaner, domestic sources of energy.
This includes £170 million for established technologies such as offshore wind, ensuring Britain remains a front runner in global offshore wind, and £10 million ring-fenced budget available for tidal stream technologies, unlocking a thriving tidal power industry here in the UK.
Building a cleaner, more secure energy future with thriving green industries will also help deliver on our promise to grow our economy and create good jobs across the country, with billions of pounds in private investment and 68,000 green jobs supported since late 2020.
The competitive nature of the Contracts for Difference scheme has already proven successful at placing downward pressure on prices since the first auction was held. This process, together with solar and wind now amongst the cheapest form or electricity generation in the UK, means the scheme will play an increasingly important role in helping to meet the Energy Security Secretary’s ambition for Britain’s wholesale electricity prices to be among the cheapest in Europe.
Minister of State for Energy Security and Net Zero Graham Stuart said: “Our flagship Contracts for Difference scheme is already delivering clean, homegrown energy as well as growing a green economy with green jobs.”
“Today’s budget announcement, the move to annual auctions and continued investment in renewable energy will limit the impact of events like Putin’s illegal war in Ukraine and drive our overriding priority for the UK to have amongst the cheapest wholesale electricity prices in Europe.”
“I am excited to see the opportunities that will open for Britain’s world-class renewable industries as annual auctions kick off this year, enhancing the UK’s reputation as among the most attractive places to invest in for a secure, affordable and prosperous future.”
The UK government continues to support the deployment of renewable power right across Britain, with the scheme so far having awarded contracts to 52 projects in Scotland, which represents around 30% of all CfD projects and around 25% of total CfD capacity. In Wales, the scheme has so far awarded contracts to 9 projects, totalling around 260MW of capacity.
The scheme is designed to be fair and deliver low carbon deployment at low-cost to consumers – so that when wholesale electricity prices are higher than the price agreed in the CfD, generators pay back the difference. This will be passed on to energy suppliers and over time, is expected to translate to lower bills for consumers.
Offshore wind has been at the heart of the scheme and the industry is a major UK success story thanks to Britain’s flagship CfD scheme. The UK has the largest operational fleet in Europe, the world’s 4 biggest individual windfarms and a world-leading ambition to deploy up to 50GW by 2030, including up to 5GW of floating offshore wind, which the scheme continues to help deliver. As set out in the British Energy Security Strategy, by 2030 the UK is set to generate more than enough electricity from offshore wind to power every home in Britain, attracting vital investment to UK coastal communities, supporting 90,000 direct and indirect jobs.
This follows an unprecedented £20 billion investment into carbon capture announced yesterday in the Spring Budget, alongside the first state backing of a nuclear project in almost 40 years at Sizewell C and confirming the next steps for Great British Nuclear to revolutionise how new nuclear projects are delivered in the UK.
Neil McDermott, CEO of the Low Carbon Contracts Company (LCCC), said: “We welcome the announcement from the government on CfD Allocation Round 5. We look forward to working with investors and generators for these important projects as we continue the journey to Net Zero.”