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The Department of Energy and Climate Change (Decc) has increased the amount of funding available to low carbon developers by an extra £25 million ahead of its first contract auction on Thursday.
Low carbon developers will now be competing for £325 million worth of support contracts, up from the £300 million promised in October, which will benefit less established technologies such as offshore wind and certain biomass technologies which begin generating from 2017/18 onwards.
Decc said the decision to increase the funding pot came following “high levels of demand” for funding support through the Contracts for Difference (CfD) regime.
Energy secretary Ed Davey said in a statement: “The high demand for contracts shows that we’re one of the top places for renewables investment, and the best place in the world for investing in offshore wind.”
The total amount of funding for less established technologies has swelled from £235 million to £260 million, with the additional funding earmarked for projects which commission after 2017/18. The funding for projects commissioning the year before will remain the same at £155 million, but from 2017 the pot will grow from £80 million to £105 million.
Meanwhile, established technologies, such as onshore wind and solar, will compete for a total of £65 million of which £50 million will be awarded to projects which begin operations in 2015/16, with a further £15 million reserved for projects commissioning from 2016/17 onwards.
Established technologies are already expecting a £50 million boost to available funding through next year’s auction, with the amount on offer to be confirmed by government by this autumn.
Thursday’s auction will be the first time that developers compete for funding through the CfD auction process. The contracts guarantee a steady revenue for the projects to help increase the investor confidence needed to bring forward billions of pounds needed in low carbon investment.
Government said that by requiring projects to compete in an auction for the contracts the investment will be achieved at a lower cost to the consumer.
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