The government has set out a pipeline of regular subsidy auctions for offshore wind projects over the next decade.
Claire Perry, minister for clean growth and climate change, announced in Newcastle yesterday (23 July) that the next allocation round for less established technologies will open by May 2019.
She said that so called Pot 2 contracts for difference (CfD) auctions will take place every two years after that, kicking off with one in 2021.
The auctions will be supported by a budget of £557 million, which is the amount left over for CfDs following last September’s £176 million Pot 2 allocation round from the £730 million originally earmarked for the programme by ex-chancellor of the exchequer George Osborne in March 2016.
The government claims that each of these auctions will deliver up to 2GW of new offshore wind generation capacity per annum in the 2020s, depending on prices when they take place.
For the first time, remote island onshore windfarms in Scotland will be able to compete in Pot 2 CfD auctions following the European Commission’s decision that support for such projects will be allowed under the EU’s state aid rules.
Renewable energy developers have been pleading with the government to supply a clear pipeline of auction rounds for more than a year and a half.
Will Apps, head of energy development at The Crown Estate, told a recent offshore wind conference organised by Westminster Forum that the landowner had granted consent for around 8GW of projects around the coasts of the UK that were waiting for support from the CfD process.
Renewable UK has calculated that the government’s announcement could help deliver up to 16GW of new capacity, equating to approximately 20 per cent of the UK’s power needs, during the 2020s.
Hugh McNeal, chief executive of Renewable UK, said: “ announcement confirming the budget and timing of new auctions, sets us on the path to deliver the tens of billions of pounds of investment that will be needed to meet our ambition of at least 30GW by 2030. This is good news for the domestic supply chain which can look forward to a pipeline of new offshore wind projects that will support tens of thousands of jobs across the UK.”
Benj Sykes, co-chair of the Offshore Wind Industry Council and UK country manager at Orsted, said the announcement will “directly enable more investment in the UK”.
Sir John Armitt, chair of the National Infrastructure Commission, welcomed the announcement but urged the government to extend forthcoming auctions to other established renewable technologies including onshore wind and solar power.
He said: “If renewables are to make up at least 50 per cent of our energy mix by 2030, I would urge ministers to go even further and extend this support to other technologies including onshore wind and solar power.”
Jenny Hogan, deputy chief executive at Scottish Renewables, called on the government to ensure that less established renewables technologies could compete effectively in the upcoming auctions.
She said: “These new auctions will be open to a wide variety of less-established technologies at different stages of maturity.
“To help UK businesses reach their full potential and realise government’s industrial and clean growth ambitions it’s vital that all innovative technologies are able to benefit from this cost reduction pathway and to compete meaningfully in auctions using the regulatory tools BEIS has at its disposal.”
While in Newcastle, where Theresa May is holding the last cabinet meeting before parliament breaks up for the summer recess, business secretary of state Greg Clark also announced a cash injection for the Offshore Renewable Energy Catapult, which is based in nearby Blyth, Northumberland.