CfD auctions timetable needed to boost offshore wind sector
Published 9 May 2018
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Ex-energy minister Sir Michael Fallon has urged his ex-Cabinet colleague Greg Clark to give offshore wind investors greater confidence by setting out a clear timetable for the next rounds of the contracts for difference (CfD) auctions.
In a letter to the Business, Energy and Industrial Strategy (BEIS) secretary of state, Sir Michael recommends the government should confirm the quarter in which the 2019 CfD auction will take place.
And he says that the next auction for CfDs, which provide low carbon generators with a guaranteed strike price for electricity, should be held in a specific quarter no more than 18 months later.
These steps should be combined with fixed dates for further leasing rounds from the Crown Estate and the Crown Estate in Scotland.
The letter from Sir Michael, who resigned from the government last autumn following allegations of sexual harassment, accompanies a report that he has produced on behalf of Middlesbrough-based offshore energy company Wilton Engineering Group.
It says the offshore wind industry needs more consistency than the current situation whereby the government has stated that the next CfD auction will take place in 2019 without specifying which quarter this will be in.
The report proposes more consistent timetabling should form a major part of the offshore wind sector deal, which is currently being negotiated between the government and the industry.
This would in turn encourage the industry to make further investment in local skills, research and innovation
A more consistent pipeline would also avoid the lumpiness involved for the supply chain if too much work is tendered and commissioned simultaneously, it says.
In addition, the report recommends a further tightening the CfD process to cut the delays between the auction and award of contracts.
Given that the public spending is already allocated up to 2025, the government should therefore set out now the full timetable by which it will be made available.
The report also recommends an increase in the target for UK content in British offshore wind projects from 50 per cent to 60 per cent with at least half of capital expenditure sourced within the UK.
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