The chief executive of Atlantis Resources has called for more clarity around future contracts for difference (CfD) rounds.
Tim Cornelius, who heads up the company behind the MeyGen tidal energy project, said while “we can almost definitely count on a 2018 and 2019 option”, investors are looking for more certainty about when the auctions will actually be open.
Earlier this month, the government confirmed the second CfD allocation with a total budget of £290 million will open on 3 April, after it was delayed from last year.
The government has previously indicated it plans to hold three CfD auctions during this parliament, with a total budget of up to £730 million, but no future dates have been set.
“If you knew exactly when a round would be, you would see more investment,” insisted Cornelius. “It’s as simple as that.”
“At the end of the day, there’s a huge amount of investment waiting to be deployed in renewable generation. You don’t need stellar returns, however the one key element that kills confidence is uncertainty and change,” he added.
“What we desperately need is clear direction from BEIS to tell us what they expect and when they want it delivered. Then investment funds will know there is a robust policy, which is not likely to be u-turned in two years’ time, because that’s the one thing that frightens the hell out of them.”
Cornelius added the signals from Whitehall are that there will be future CfD options with reasonable timeframes and “we’re going to hold them to that”.
The Renewable Energy Association has also called for a timetable for future auctions in order to help the sector plan for the longer term.
The eligible areas for the next CfD round include offshore wind, anaerobic digestion, wave and geothermal. Solar energy, however, is not covered under the scheme.
According to recently published government documents, the administrative strike price for offshore wind has been set at £105/MWh for 2021/22 and decreases to £100/MWh for 2022/23, while anaerobic digestion will be £140/MWh and £135/MWh, respectively.
The head of power and utilities at KPMG, Simon Virley, who was also previously director general for energy at DECC, said it is “likely to be a highly competitive auction” and the price of offshore wind expected to fall below the cost of the Hinkley Point C nuclear deal.
“If strike prices fall far enough, we could see more than 2GW of offshore wind being awarded a CfD,” he predicted.