Onshore and offshore wind expected to receive CfD funding

The results of the next Contracts for Difference (CfD) auction will be published on Friday, 20 September, and are expected to include expansions for both offshore and onshore wind. The CfD scheme provides monetary and regulatory incentives for investment in renewable energy sources. Companies compete in auctions for government contracts which can provide financial aid and regulatory protection to their proposed renewable projects.

So far, two CfD auctions have taken place. In September 2017, the scheme cut the cost of new offshore wind in half, allowing offshore wind projects to accelerate. Three offshore wind projects approved in 2017 secured 3.2 GW of energy capacity together at a price of £57.50 per MWh. The new offshore wind projects must compete on price below £53-56 per MWh and up to 6 GW of capacity to secure contracts. These offshore projects are expected to begin operating between 2023 and 2025.

In addition to the competing offshore wind projects, onshore wind producers have been fighting for the opportunity to be considered for CfDs. Since 2015, government financial support for onshore wind has not been allowed, disqualifying onshore wind projects from the CfD scheme. Energy companies, NGOs and MPs have been pressuring the Government to lift the ban on onshore wind finance with a series of letters and judicial action, reported on here, here and here. For the first time, onshore wind will be allowed to compete for CfDs though project proposals remain confined to Scottish Islands. Despite the small amount of area where onshore wind will be allowed, the ability to compete for CfDs is a step toward industry growth in the onshore wind sector.

Luke Clark of renewable trade association RenewableUK has said of the expected CfD results: “This round of auctions for new renewable power is expected to deliver record amounts of new generating capacity at record low prices, which will be great news for consumers and for the climate. This is a vital step in shifting the UK onto the path of rapid decarbonisation that we need to achieve net zero emissions as fast as possible.”

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