Government explores reform to renewables scheme
The government is considering reform of its flagship Contracts of Difference (CfD) scheme for low-carbon electricity generation projects.
Views are being sought on plans to reviewing applications not only on delivery of low-cost renewable energy deployment, but also how much a renewable energy project “contributes to the wider health of the renewable energy industry”.
Currently, CfDs are awarded on the bid price submitted by renewable energy generating stations, such as an offshore wind farm – the aim being to increase deployment and ensure good value to consumers and drive down costs over a period of time.
The new proposed reforms could see applicants consider overall costs alongside other ‘non price factors’ – such as supply chain sustainability, addressing skills gaps, innovation and enabling system and grid flexibility, and operability. The Call for Evidence is part of the government’s work to continue to evolve the CfD scheme – if following evidence, appropriate changes have been identified and deemed more effective, the Government will launch a consultation on more detailed proposals.
Going further
Minister of State for Energy Security and Net Zero Graham Stuart said: “We want to go further to ensure we maximise the scheme’s potential to improve energy security and ensure renewable energy developers can make the necessary investment in supply chains and innovation, which will ultimately make for a stronger sector and help our economy to grow.
“This potential reform to the scheme to introduce non-price factors presents a solution to grow the renewable energy supply chain as we accelerate our energy transition plans to power more of Britain from Britain.”
Tim Pick, who recently completed his term as the Offshore Wind Champion, said: “As noted in my recent report, price-only CfD auctions have created a strong driver for innovation to drive down costs, but there is a need in the current climate to consider how to better develop new supply chains and associated jobs.”
Adam Berman, Deputy Director for Advocacy at Energy UK, said: “If designed appropriately, the inclusion of new factors in the CfD could improve investment certainty for low carbon projects, boosting energy security as well as ensuring that all parts of the UK benefit from the jobs, skills, and supply chain opportunities these multi-billion pound investments bring.”
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