A new "pot one" style auction could help deliver 1GW of extra capacity and £49 per MWh
Ministers could let onshore wind bid in a new contracts for difference (CfD) round one, without contradicting its previous pledges to end all new subsidies, according to Scottish Renewables.
A Baringa Partners’ report published today, which was commissioned by the industry body, said a “pot one” style CfD round for onshore wind could help deliver 1GW of extra capacity in the UK, as well as clear a highly competitive price of £49.40 per MWh.
Scottish Renewables’ chief executive, Niall Stuart told Utility Week there has already been a marked slowdown in the rate of development since the RO closed.
“Some companies are continuing to look at projects, but it is very difficult to see them going ahead without some sort of intervention,” said Stuart.
“If you want to deliver onshore wind capacity at a scale, which will make a meaningful contribution to the UK’s work to meet climate change targets and secondly keep bills down for consumers then you will need a CfD framework.”
Stuart said he did not believe reopening CfD to onshore wind would represent a subsidy, because “more money would be handed back to consumers over the last two thirds of the contracts then would be topped up in the last third”.
“For me, it’s perfectly possible to allow onshore wind and other established technologies to bid into pot one without any contradiction with the Conservative party manifesto, which said the government would end new subsidies for onshore wind.”
Baringa Partners’ senior manager, Peter Sherry, said “dramatic reductions” in cost around the world in renewables and storage technology were a “game changer”.
“Even with no direct subsidy required, the government can still play an important role in offering a low-risk route to market for new onshore wind, via the CfD mechanism,” said Sherry.
The latest CfD round opened for applications on 3 April and will close on 21 April, but it does not include onshore wind.
Earlier this month, the Conservative thinktank bright blue published a survey, which claimed the majority of Tory voters backed onshore wind.
Responding to the new Baringa Partners report, the thinktank’s senior researcher, Sam Hall, said: “This study shows significant potential to develop new zero-subsidy onshore wind projects in the UK. The Government was right not to offer new subsidies to onshore wind, as costs have reduced substantially and the technology has been deployed at scale.
“But an unsubsidised fixed-price contract could now be offered to new onshore wind projects, which would be set at the current wholesale price. This would enable us to meet our carbon budgets in the most cost-effective way.”
RenewableUK’s executive director, Emma Pinchbeck, said onshore wind is “absolutely crucial” to “keeping the lights on at the lowest possible cost to consumers”.
“This report shows that if onshore wind was allowed to take part in the competitive auction process, it would prove yet again that it can provide power for British homes, businesses and factories cheaper than any other low-carbon technology”.
“The Baringa report shows that new onshore wind projects pay back more overall to consumers over the lifetime of a project”.
A BEIS spokesperson said: “Thanks to UK government support we will have more than 12GW of onshore wind generation in Britain by 2020, and its costs have fallen dramatically.
“It’s only right that we now focus funding on newer technologies so they can also develop, delivering better value for money to bill payers and providing a further boost to our renewables industry to meet our climate change commitments.”