03 Aug, 2023: The UK’s Energy Security Secretary, Grant Shapps revealed that the government will be providing an additional £22 million in support for renewable energy projects through the Contracts for Difference scheme, which will bring the total budget allocated for this auction to £227 million.
The Contracts for Difference scheme, which was introduced in 2014, serves as the primary mechanism employed by the government to promote low-carbon electricity generation. It has already demonstrated its effectiveness in increasing the share of renewable energy in the UK's overall energy mix.
Energy Security Secretary Grant Shapps said in a government press release, ‘‘Today’s funding through our flagship Contracts for Difference scheme – the lifeblood of our renewables industry for nearly a decade – will help grow our economy by making Britain the first choice for investors in renewable energy projects and secure skilled jobs for future generations. He also said, ‘‘This will be the case for established technologies like solar, and new innovations like floating offshore wind and, alongside our backing for oil and gas, carbon capture and our revival in nuclear, will ensure we can help power more of Britain from Britain for decades to come.’’
The recent funding allocated for the ongoing round (AR5) will result in the following:
- Enhanced funding for well-established technologies like solar and offshore wind, with the budget rising from £170 million to £190 million.
- A higher budget for emerging technologies, specifically floating offshore wind, which will be increased from £35 million to £37 million.
- The preservation of a ring-fenced budget of £10 million dedicated to supporting tidal stream projects.
The latest financial support will enable the substitution of expensive imported fossil fuels with more affordable and cleaner domestic energy sources. This will foster a more secure energy future and promote the growth of eco-friendly industries, boosting the UK's economy and the creation of numerous jobs nationwide. The substantial private investment in this endeavour is expected to yield significant returns.
The Contracts for Difference scheme has already made significant progress in achieving its goals of diversifying, decarbonising, and localising the UK's energy supplies. In the last round (AR4), approximately 11GW of low-carbon capacity was secured through nearly 100 clean technology projects, generating enough electricity to power 12 million British homes.
The scheme has been actively supporting the deployment of renewable power all over the country. With contracts awarded to 52 projects in Scotland, making up around 30% of all CfD projects, and 9 projects in Wales, totaling about 260 MW of capacity, the scheme's positive impact is evident across the nation.
With the infusion of increased funding and the implementation of annual auctions in the current year, investments in Britain's leading renewable industry are expected to soar. This move will not only bolster the country's energy security but also foster growth in its green sectors, while simultaneously reducing dependence on fluctuating global fossil fuel prices.