It’s “perfectly plausible” for a future Conservative government to row back on future contracts for difference (CfD) rounds and other decarbonisation schemes, an energy consultancy has warned.
Speaking to Utility Week, the chief executive of Cornwall, Gareth Miller said a future Conservative government could break away from the cross-party consensus on decarbonisation, which has been in place for almost two decades.
In the event of a Conservative victory in next month’s general election and an increased majority, Miller said he could envisage a situation where “there is no such thing as an untouchable policy, when it comes to supporting low carbon generation”.
“We’ve seen plenty of changes in policy that were unexpected over the last two or three years, and that’s been in an environment that reflects a consensus of pursuing low carbon ambitions,” added Miller. “Post-election, that consensus may not matter so much.”
“There is an opportunity for a new government to pause, think and reconsider what they do,” he said.
“CfD auctions this parliament? They have earmarked the budget and said they will run three, but there’s nothing in law that says they have to. It’s perfectly plausible for a new government to turn around and say ‘bills are going up, we need to take pressure off consumers and we just have procured several gigawatts of offshore wind in this auction, do we really need to do this?’
“You can see plenty of scope for those things to happen, particularly if they get a whopping majority.”
The current CfD round closed to bidders last week (21 April) and the final results are expected to be announced in the autumn.
Miller predicted that offshore wind is “likely to be the winner” in the current round, with a strike price below £70.
EY’s head of energy and environmental finance, Ben Warren, told Utility Week he also believes offshore wind “will come out as the clear winner” in the current bidding round, as a “consequence of the increasing competitiveness of the technology”.
“If that prediction is right, then the really interesting question will be how many projects get an award, because there’s probably only enough budget for two sensible-sized schemes and what price do they go for?” said Warren.
“I suspect the prices will be a surprise to most. I think the reality around the CfD is cost-competitive technologies will win. I don’t think the government is in a mindset to continue to subsidise particular technologies, which if I’m right, will be a great shame to a lot of great quality waste projects, which do a lot more than just produce power.
“But, I think a large proportion of the budget will be taken up by a small number of offshore wind projects at quite surprising pricing.”