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Move to annual CfD auctions welcomed by UK renewable energy sector

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The UK Government will increase the frequency of auctions for funding through the Contracts for Difference (CfD) scheme, to boost investment and jobs in renewable energy.

CfD auctions will now take place every year rather than every two years. This will support renewable electricity producers and boost the UK’s renewable energy infrastructure.

The Association for Renewable Energy and Clean Technology (REA) welcomed the move, which it has long called for. The REA said the switch will aid the energy transition and protect the UK from the volatile fossil fuel prices which have driven the recent energy bill spike.

CfDs are the government’s primary method of supporting renewable energy, driving down the cost of technologies and playing a key role in leveraging £90 billion (€106 billion) of private investment by 2030. The scheme has already brought down the per-unit price of offshore wind by approximately 65% since the auctions were first held.

In the last allocation round, new contracts were awarded with the potential for nearly 6 GW of further capacity. This is enough to power over 7 million homes at record low prices and could see the generation of thousands of jobs across the UK.

The REA believes adding further technologies such as bioenergy, wave and tidal, geothermal and ACT would provide a balanced generation mix with benefits felt across the nation.

“We and others have called for more frequent auctions for a number of years, most recently in response to the energy bills crisis,” said Frank Gordon, director of policy at the REA.

“More power will be needed as sectors decarbonise, and moving to renewable, domestic energy supplies is ultimately the only way to prevent us being exposed to volatile international fossil fuel prices that drive bill increases while enabling net zero.

“The fact that CfD projects have paid back several million pounds to the Treasury illustrates the cost-effectiveness of new renewable power. We look forward to seeing more detail on the proposed timetable and budget for the auctions, and would like to see a timetable of at least a rolling three-year date, ideally out to 2030, to allow industry time to plan.”

The REA is now urging the government to “move at pace” to introduce effective flexibility markets, support for long-term energy storage, decarbonise the heat sector and introduce new measures to allow householders to reduce their energy usage in the face of rising bills.