The UK renewables auction scheme: Pioneering clean energy

A recent announcement has revealed that the UK government’s renewables auction scheme has delivered a record clean energy capacity.

Today, 7 July 2022, several benefits of this renewables auction scheme were reported:

  • The government’s flagship renewables auction scheme has delivered a record capacity of almost 11GW of clean energy, almost double the capacity achieved in the previous round;
  • Enough to power around 12 million British homes with clean, affordable, homegrown energy, helping to reduce exposure to volatile global prices; and
  • Almost 7GW of capacity from new offshore wind projects that will increase the country’s overall capacity built and under construction by 35%.

Boosting energy security with renewables

It has been announced that the fourth round of the Contracts for Difference (CFD) scheme has been the most successful to date, securing almost 11GW across a range of clean technologies, including offshore wind, solar, onshore wind, floating offshore wind, and tidal stream. This is assisting in boosting British energy security and independence with cleaner, more affordable, and diverse energy created in the UK.

CFDs provide reassurance to project developers and encourage them to invest in new renewable energy infrastructure by protecting them from volatile wholesale prices. Additionally, a unique benefit of the CFD scheme is that when wholesale electricity prices are high, as they have been in recent months, generators pay the money back into the scheme to reduce the net costs for the consumers.

The greatest capacity – approximately 7GW – has been secured from new offshore wind projects around the coastline of Great Britain. This is enough to increase the country’s overall capacity, both built and under construction, by 35% and take a significant step towards meeting the government’s 50GW of offshore wind ambition by 2030.

The scheme has had a downward pressure impact on prices

Due to the competitive nature of the scheme, it had been noted that it has continued to place downward pressure on prices. The per unit (MWh) price of offshore wind secured in this round is approximately 70% less than that secured in the first allocation round, in 2015.

Both onshore wind and solar energy were included in a CFD auction for the first time since 2015. Onshore wind secured approximately 0.9GW of new capacity, clearing at a per-unit price that was more than 45% lower than in the first CFD round in 2015, while solar secured more than 2.2GW.

“Eye-watering gas prices are hitting consumers across Europe. The more cheap, clean power we generate within our own borders, the better protected we will be from volatile gas prices that are pushing up bills,” explained Kwasi Kwarteng, Business and Energy Secretary.

“Thanks to today’s record renewable energy auction, we have secured almost 11GW of clean, home-grown electricity – which would provide as much power as around six gas-fired power stations.

“These energy projects already have planning permission, now they have a funding contract in place. We are going to have these projects built as soon as possible to better protect millions of British families from rising costs.”

The successful implementation of developing technologies

Additionally, the fourth round also observed the successful implementation of developing technologies, such as tidal streams and floating offshore wind projects for the first time. The tidal stream returned a capacity of 41MW, and floating offshore wind returned 32MW.

Overall, 93 projects with existing planning permission across England, Scotland, and Wales have been offered contracts through the competitive auction process, which is more than in all three previous rounds combined.

It has been noted that this helps the renewables auction scheme coagulate the UK’s role as a world leader in renewable electricity, as well as driving investment in new, future-proof industries, creating skilled jobs, and helping reduce emissions across the country. Additionally, these results also represent considerable progress towards achieving ambitions set out in the British Energy Security Strategy, including for the offshore wind sector, which supports approximately 90,000 high-skilled jobs across Great Britain by the end of the decade.

Securing a more resilient energy system

Furthermore, as well as securing a record level of clean electricity generation capacity, the fourth CFD round of the UK renewables auction scheme has delivered energy from a greater number of renewable technologies than ever before, helping to ensure an energy system that is both more secure and resilient.

Thus, this is a significant step towards securing a future where Great Britain is powered by cheaper, reliable, homegrown energy, delivering on ambitions laid out in the British Energy Security Strategy. An increase in renewables will drastically reduce the country’s exposure to the volatile global fossil fuel prices that are pushing up energy bills for millions of households.

“This fourth round shows the government’s Contracts for Difference scheme continues to be a roaring success,” said Greg Hands, Energy Minister.

“Not only has it secured a record capacity of clean electricity, but it also ensures the UK will have a future powered by a resilient and diverse supply of homegrown energy by bringing forward a greater range of renewable technologies than ever before.”

95% of electricity set to be low carbon by 2030

The government’s British Energy Security Strategy intends to accelerate the deployment of renewable technologies in Great Britain, with an ambition to see 95% of electricity being low carbon by 2030. The strategy also set out an increased ambition for the number of clean jobs in the UK by supporting 90,000 in offshore wind by 2030.

“Today’s record-breaking auction results show that there is a way to replace unaffordable gas with low-cost clean power generated by a wide range of renewable technologies led by wind, both offshore and onshore. Thanks to the rapid construction times of new onshore wind and solar sites, billpayers will start to feel the benefits of today’s auction next year,” concluded Melanie Onn, Deputy Chief Executive at RenewableUK.

“The auction also showed that the UK is maintaining its position as a world leader in innovative renewable energy technologies like a tidal stream and floating wind, which will both play an increasingly significant role in our transition to clean power to meet our net zero goal.

“Working closely with the government, we need to make this country the most attractive place to invest in. This is particularly important if we want to develop our supply chain in new technologies like floating wind, tidal stream, and green hydrogen, in which we can lead the global market and seize the export opportunities this offers.”

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