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New bidding round “underlines that Britain is open for business” says minister
The eagerly-awaited second contracts for difference (CfD) auction launched today, with £290m of deals available for various renewable energy projects.
Potential bidders have until 21 April to submit their applications for funding, with final decisions and clearing prices expected to be announced in the autumn.
The two delivery years for this round are 2021/22 and 2022/23 the eligible areas include offshore wind, anaerobic digestion, wave and geothermal, but not solar energy, which is not covered under the scheme.
According to the government, the contracts offered in this round will “support a key pillar of the industrial strategy”.
“This auction underlines that Britain is open for business to companies seeking to invest in low-carbon energy,” said energy minister, Jesse Norman.
“It is designed to deliver clean power to a million homes, create jobs in the energy industry and provide new supply chain opportunities, while reducing carbon emissions by some 2.5 million tonnes a year.”
The government is also expected to hold two more CfD rounds before the end of this parliament, although no dates have been set.
RenewableUK’s executive director Emma Pinchbeck said it’s “important that the CfD process is now moving forward”.
“We anticipate that offshore wind developers will offer the best value for money in these next round of auctions, undercutting the rest of the competition, and clearing at a lower strike price than nuclear.
“This is because we’ve focused relentlessly on driving down our own costs, which have fallen by a third since 2012, meeting a Government target four years ahead of schedule. This is good for consumers as it reduces bills. In addition, the UK offshore wind supply chain continues to be built up, ensuring that it’s British-based companies which reap multimillion-pound benefits as the industry expands. As these auctions are set to prove, UK offshore wind is a force to be reckoned with.”
Speaking to Utility Week last week, the chief executive of energy consultancy Cornwall, Gareth Miller, said this current round promises to be “a very competitive auction”.
“The combination of declining technology costs and the extent of competitive tension in the auction, and also the uncertainty about when the next auction will be will drive bidders to bid very aggressively, and I think that will result in very low prices for offshore wind as a result,” predicted Miller.
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