Flagship renewables scheme set to deliver 3.7GW of clean homegrown energy, enough to power the equivalent of 2 million homes
A record number of clean energy projects have today (Friday 8 September) been awarded funding from the government’s flagship renewables scheme helping the UK grow the economy, achieve net zero, protect families and businesses from volatile global gas prices, and strengthen energy security.
From the first annual Contracts for Difference round, a total of 95 clean energy projects have been successful with their bids – up from 93 in the previous round. The latest round had budget funding of £227 million and has secured enough to power the equivalent of 2 million homes.
Significant numbers of solar power and onshore wind, and a record number of tidal energy schemes, have been awarded funding today. For the first time, geothermal projects – which use a natural heat source underground for generating power - have also been successful.
Launched in 2014, the Contracts for Difference scheme ensures projects receive a guaranteed price from the government for the electricity they will generate – giving companies certainty and confidence to invest in the UK.
Contracts are awarded through a series of competitive auctions, where the lowest price bids are successful, ensuring value for money for consumers. This year’s auctions were split to ensure that new, less established energy sources do not have to compete for budget from long-established technologies – offering certainty for developers and keeping the UK at the cutting edge of the renewables industry.
Energy and Climate Change Minister Graham Stuart said:
Half of this year’s total capacity has been secured by new solar projects, while onshore wind projects have delivered almost 1.5GW of capacity and secured more than double the projects (24) than last year’s round (10). The latest round also saw a £10 million ringfenced budget for tidal stream help to return a record 11 projects, with a record capacity of over 50MW. There are also three winning projects for geothermal for the first time in the scheme’s history, totalling 12MW of capacity. This will generate enough electricity to power the equivalent of 2 million homes.
While offshore and floating offshore wind do not feature in this year’s allocation, this is in line with similar results in countries including Germany and Spain, as a result of the global rise in inflation and the impact on supply chains which presented challenges for projects participating in this round.
However, the industry remains a British success story, with the government committed to its ambition of securing 50GW of offshore wind capacity and 5GW of floating offshore wind by 2030. The UK is home to the world’s four largest operational wind farms and just last year the UK installed 300 new offshore wind turbines, with Contracts for Difference contributing towards 29GW of total wind capacity and helping power the equivalent of around 24 million homes.
From 2010 to 2020, the UK attracted almost half of all offshore wind investment in Europe, worth around £48 billion, making it the biggest market for capital spending commitments. On top of this, the £160 million Floating Offshore Wind Manufacturing Investment Scheme has also launched, offering investment into port infrastructure projects to enable the roll-out of floating offshore wind at scale.
To support the industry even further, the government reviews its approach ahead of each Contracts for Difference round and, with the introduction of annual auctions, project developers, including those from the offshore wind industry, will now have more frequent opportunities to participate. This will also allow the government to respond more quickly to ensure the scheme continues to support the sector, maintain investment and continue its success.
The government is already gearing up for the sixth round of auctions in 2024 - which will be the second annual auction - and looks forward to future participation in offshore and floating offshore wind.
It is also anticipated that around £100 billion of private investment will be forthcoming into the UK’s energy transition, which is expected to support up to 480,000 jobs by 2030, including 90,000 jobs in the offshore wind.
Notes to Editors
Pot budget estimates, including this year’s £227 million budget split across the 2 pots, were set by 2011-2012 prices in line with the Control for Low Carbon Levies. These figures are an estimate of annual support in the years following deployment. Actual annual figures will vary over the lifetime of the contract depending on future wholesale electricity prices, and outcomes of the auction process.