The Sunak administration in the UK has boosted the money available for Allocation Round 5 (AR5) in its flagship contract for difference (CfD) auctions.

Responding to concerns expressed by industry as inflation has driven the cost of developing projects upwards, and about the size of the budget initially made available for AR5, Energy Security Secretary Grant Shapps said AR5 would get a £22M (US$28M) boost. This takes the total budget to £227M for this auction.

Mr Shapps said, “Putin’s barbaric action against Ukraine made clear our need to do whatever it takes to bolster our energy security.

“Today’s funding through our flagship CfD scheme will help grow our economy by making Britain the first choice for investors in renewable energy projects and secure skilled jobs for future generations. This will be the case for established technologies and new innovations like floating offshore wind.”

The additional funding for the current round will mean an increased budget in AR5 for established technologies such as offshore wind and solar, which will increase from £170M to £190M. There will also be an increase in the budget for emerging technologies such as floating offshore wind, up from £35M to £37M. 

In a statement, the government said it hoped the funding boost will “send a powerful signal to industry, increasing developer confidence in the sector every year and enhancing the UK’s reputation as among the most attractive places to invest and grow the economy.”

Minister of State for Energy Security and Net Zero Graham Stuart said, “Our successful, world-leading scheme has accelerated the roll-out of renewable, homegrown energy.

“Today’s increase will improve energy security and maximise the potential of the scheme. This will result in investment, a stronger renewables sector and growth to our economy.”

Chief executive of the Low Carbon Contracts Company Neil McDermott said, “The £22M boost to CfD AR5 reaffirms the government’s commitment towards transforming Britain into a global leader in renewable energy.

“CfDs play a crucial role in enhancing energy security, driving economic prosperity and propelling us towards a more sustainable future.”

Responding, RenewableUK executive director of policy Ana Musat said, “Today’s announcement by the Government of a budget uplift of £22M for this summer’s auction is welcome, particularly given the industry’s concerns that the budget published initially – which was £80M lower than last year – would limit the number of viable renewable energy projects able to secure a contract to generate clean power.

“At a time when the UK is investing heavily in energy security and looking to create additional economic opportunities by growing the renewables supply chain, it is essential that we have a consistent pipeline of projects.

“An increased CfD budget can help, but the most important step government could take to encourage investment in this growing sector would be to ensure that we have sustainable pricing in future auctions, which take into account the difficult economic circumstances faced by the sector. Setting artificially low prices will deter investment, reduce our pipeline and limit the UK’s ability to stay ahead in the global race for renewable energy capital, skills and supply chain investment.”

Scottish Renewables policy manager Andrew MacNish Porter said, “The UK Government calls the CfD mechanism ‘the lifeblood of our renewables industry’, and while the budget increase is welcome, it falls far short of what’s needed to ensure the heart of this vital part of the UK’s economy keeps pumping.

“While the sums mentioned may seem large, they are simply not enough to unlock the £50-60Bn in capital investment which will be required each year to deliver on the UK’s net zero ambitions through the late 2020s and 2030s and the £1.1Trn which the Office for Budget Responsibility projects the UK will save by 2050 if it reaches net-zero.

“Going forward, the UK Government must ensure it properly funds the CfD scheme to maximise the deployment of the low-cost, home-grown renewable energy projects we need to end our reliance on expensive imported gas and tackle climate change.”

Source: Riviera