Commenting on the Government’s publication of the framework governing the next auction for new clean energy capacity - Contracts for Difference Allocation Round 7 - RenewableUK’s Policy Manager Nick Hibberd said:
'Today’s release of key details about the upcoming clean power auction provides much-needed clarity and certainty for investors in vital new renewable energy projects. Maximising the amount of capacity we secure in this round, and in next year’s auction, will be absolutely crucial to keep us on track to reach the Government’s target of clean power by 2030. Projects awarded contracts in these two auctions can be built in time to achieve that goal. This new capacity will also strengthen the UK’s energy security significantly.
'We are delighted to see that Government committed to extending the contract length for Contracts for Difference from fifteen years to twenty years, which will boost the attractiveness of new UK projects at a time of intense international competition for private investment.
'The Government is allowing unconsented fixed-bottom offshore wind projects to bid into this auction for the first time, however we note that this will only be possible under strict criteria, after projects have already completed some stages of the application process. This means that 20 gigawatts of offshore wind is now eligible to bid into this auction, which is more than the UK’s entire current offshore wind capacity of nearly 16GW. The focus should therefore be on ensuring that projects are delivered in a timely way to contribute to Clean Power by 2030.
'We welcome the new budget-setting process, in which the Secretary of State will have partial visibility on sealed bid information for projects that breach the initial budget. The budget can then be increased to procure projects above the initial budget if they are deemed to be good value for money for consumers. This will mitigate the risk of significant budget underspend we have seen in previous years and ensure we maximise the deployment of high quality renewable energy projects in this auction.
'We’re pleased that the Government has taken on board the industry’s recommendations to kickstart floating wind at scale by setting a budget at the right level to enable Test and Demonstration projects to go ahead in this auction. This is a crucial step forward which will enable the UK to remain a global leader in this innovative technology.
'We welcome the Government’s commitment to encourage the repowering of older onshore wind projects by providing CfD support as a key measure which will help us to double the UK’s onshore wind capacity by 2030.
'If we are to attract the record amount of investment this year, we need to see the rest of the auction details set out as soon as possible. These should include more realistic expectations of future electricity prices to estimate the value of new projects more accurately, and Administrative Strike Prices which reflect global cost pressures. We would also advise the Government to provide greater flexibility to developers on the delivery milestones for projects, to enable cost reduction and mitigate supply chain and construction challenges'.
Source: RenewableUK
