Responding to confirmation of the budget, date and details of the next auction round for Contracts for Difference (CfDs), RenewableUK’s Chief Executive Hugh McNeal said: “It’s great news that the Government is supporting offshore wind. This will enable our world-leading industry to deliver significant investment to the UK. The competitive auction process is continuing to drive down the cost of offshore wind energy at an unprecedented speed.
“British supply chain companies are already seizing the massive economic opportunities offered by offshore wind – and there’s great potential for further job creation by innovative companies throughout the UK as the industry continues to grow. The Supply Chain Guidance published by Government today will help us to make further strides forward on this.”
Developers of remote Scottish Island projects, which face higher grid connection costs than those on the mainland, had been awaiting an announcement on a specific Scottish Islands CfD. However, the Government did not set out how this CfD auction would support such projects, announcing instead that a 12-week consultation exercise is being launched today.
McNeal commented: “New projects on remote Scottish islands would provide much-needed power and economic benefits to their local communities. Any delay means those communities won’t receive these benefits. We need to ensure that this opportunity is offered to them.”
The Government has published strike prices for wave and tidal energy, but has not specified a “minima” – a minimum level of deployment for which money would be specifically allocated.
McNeal added: “We will continue to work with Government to find a way forward for the UK’s innovative wave and tidal energy industries, but we’re disappointed that no minimum level of deployment has been set for them. These ground-breaking technologies can replicate the cost reduction we’re seeing in offshore wind and deliver industrial benefits to Britain. We can’t risk falling behind and handing our global lead to other countries.”
Today’s announcement relates to auctions for developing technologies, and not to developed technologies such as onshore wind on the UK mainland.
Responding to the announcement, Niall Stuart, Chief Executive of Scottish Renewables, said: “We’ve waited a long time for this announcement, which signals further significant investment in the UK’s offshore wind sector.
“However, developers and communities on the Scottish remote islands will be bitterly disappointed that Government has put off a decision on allowing projects on Scotland’s islands to compete for long-term contracts for renewable energy.
“After years of work on this issue, and many ministerial pledges to resolve it, we still seem no further forward to unlocking investment on Scotland’s islands – home to some of the best wind, wave and tidal resources in Europe.
“With more than 800MW of renewable capacity consented and ready to deliver and a significant capital spend going to UK-based suppliers, the island projects not only serve as important contributions to the Scottish and UK renewable energy targets but to our economy as well.
“But they can only go ahead with contracts to underpin investment and to help meet the prohibitive costs associated with connecting the islands to the national grid.”
There was also disappointment for the wave and tidal sectors with no budget ring-fenced for marine energy projects, unlike the previous auction.
Stuart continued: “The wave and tidal sectors are still at an incredibly early stage in their development, and simply not ready to compete with offshore wind on cost alone.
“If we want to continue the development of the UK’s world-leading wave and tidal sectors then we now need government to look at how it will support the development and roll out of the technology to get it to the stage where it can compete in the future.”
Today’s announcement will, however, be more welcome news for the offshore wind sector, after a year-long wait for the UK Government to finally kick-start the auction process.
Stuart said: “With a budget of £290 million allocated to the auction for the 15-year contracts, a number of offshore wind projects will now decide on whether they wish to bid in.
“There will be strong competition across the UK for these contracts, which will deliver further significant reductions in costs for consumers.
“And continued expansion of the sector will ensure new opportunities for our growing offshore wind supply chain.”
Mr Stuart also highlighted a number of other sectors which had been left out of the auction all together, with no budget allocated to more mature renewables such as onshore wind and solar.
He said: “The Government’s decision not to run an auction round for onshore wind and solar makes no sense given their own research shows that these technologies are on track to be the cheapest forms of electricity generation in the UK by the middle of the next decade.
“Both could make a significant contribution to meeting our future climate change targets, keeping bills down for consumers and to driving industrial activity here in the UK. But instead, they are being left in limbo, amongst the only forms of electricity generation in the UK unable to access any contractual framework to support long-term investment.”