Facilitating the drive towards renewable sources for electricity in the UK

The government is announcing details of how the UK will attain more of its electricity from renewable sources as it announces a new round of its flagship renewable energy scheme.

The Contracts for Difference (CfD) scheme is the government’s main means of fostering investment in low-carbon electricity and is open to projects running in the UK.

Encouraging investment

It encourages investment in renewable energy by offering protection from unstable wholesale prices to the developers of projects with large upfront costs and long lifetimes. This thereby guarantees that consumers do not pay greater costs when electricity prices are high.

Each year, £265m will be granted to businesses in the fourth round of the scheme, which has the objective of doubling the renewable electricity capacity secured in the third round, as well as generating more than the three other rounds combined.

The latest announcement is comprised of £200m to support the development of offshore wind projects. This will aid in meeting the government’s manifesto commitment to make certain that the UK has 40GW of capacity by 2030. As well as this, £55m will be made available for supporting the development of renewable technologies. £24m of that is ringfenced for floating offshore projects for the first time, demonstrating dedication to the expansion of this high-potential, groundbreaking technology.

For the first time since 2015, established technologies, such as onshore wind and solar, will also be able to bid. The government is looking for up to 5GW of capacity from these technologies, with a £10m budget. This will facilitate investment in all parts of the UK, with a particular focus on Scotland and Wales.

The CfD scheme

The CfD scheme has enhanced the triumph of the UK’s world-leading offshore wind industry. As set out in the Prime Minister’s Ten Point Plan for a Green Industrial Revolution, the offshore wind sector is projected to provide up to 60,000 UK jobs by 2030.

The earlier round of the CfD scheme provided record-low prices and obtained enough clean energy to power more than seven million homes. The scheme’s competitive design also safeguards consumers, and as a result of the investment of succeeding governments, the price of offshore wind has been decreased by around 65%.

These costs continue falling as green technology evolves, with solar and wind now cheaper than coal and gas in the majority of the world. Ahead of the COP26 Climate Change Summit, the government has pledged to support green technology and the high-quality jobs it generates, in order to facilitate the UK in building back better from the pandemic.

Energy Minister Anne-Marie Trevelyan said: “The Contracts for Difference scheme has helped the UK become a world leader in clean electricity generation and lowered prices for consumers.

“The new plans set out today deliver on the Prime Minister’s Ten Point Plan and will support the next generation of renewable electricity projects needed to power our homes and meet our world-leading climate change targets.”

CfD contracts are distributed via a competitive auction method where the most inexpensive projects in each technology group are granted contracts first.

This announcement confirms government assistance that will be offered to renewable projects, alongside levels of electricity generation capacity that are projected to be produced in the fourth CfD round. Final levels of support and capacity may be higher and will be revealed before the round opening in December.


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