The first annual Contracts for a Difference for 2023 has a confirmed budget of £205M, Government has announced.
This represents significant financial backing for the flagship renewables auction, designed to boost Britain’s energy security. Some £170M is pledged for established technologies, such as offshore wind, to ensure Britain remains a front runner in renewables and £10M is ring-fenced for tidal stream technologies, unlocking a thriving tidal power industry.
The scheme will bolster investment into the sector every year, delivering clean, homegrown energy as well as green growth and jobs.
The Contracts for Difference (CfD) scheme is the government’s flagship mechanism for supporting new British low-carbon electricity generation projects, so far awarding contracts to projects totalling nearly 27GW of low carbon capacity. This has helped accelerate plans to diversify, decarbonise and domesticate our energy supplies, with the last round (AR4) securing almost 11GW of low carbon capacity – enough to generate sufficient electricity to power 12 million British homes.
The confirmation of a budget of £205M for the fifth CfD allocation round, confirms another year of significant financial backing by government for green industries and jobs. This will bolster investment into the sector every year, helping to support green energy and jobs of tomorrow and replace expensive fossil fuels with cheaper, cleaner, domestic sources of energy.
The competitive nature of the Contracts for Difference scheme has already proven successful at placing downward pressure on prices since the first auction was held. This process, together with solar and wind now amongst the cheapest form or electricity generation in the UK, means the scheme will play an increasingly important role in helping to meet the Energy Security Secretary’s ambition for Britain’s wholesale electricity prices to be among the cheapest in Europe.
Minister of State for Energy Security and Net Zero Graham Stuart said: “Our flagship Contracts for Difference scheme is already delivering clean, homegrown energy as well as growing a green economy with green jobs.
“I am excited to see the opportunities that will open for Britain’s world-class renewable industries as annual auctions kick off this year, enhancing the UK’s reputation as among the most attractive places to invest in for a secure, affordable and prosperous future.
The UK government continues to support the deployment of renewable power right across Britain, with the scheme so far having awarded contracts to 52 projects in Scotland, which represents around 30% of all CfD projects and around 25% of total CfD capacity. In Wales, the scheme has so far awarded contracts to 9 projects, totalling around 260MW of capacity.
Neil McDermott, CEO of the Low Carbon Contracts Company (LCCC), said: “We welcome the announcement from the government on CfD Allocation Round 5. We look forward to working with investors and generators for these important projects as we continue the journey to Net Zero.”
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