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UK government announces plans for second £290m CfD budget

The UK government has unveiled its plans for a second contracts for difference (CfD) scheme auction, preparing to allocate £580 million (€651.6m) in support for renewable energy projects.

The auction is scheduled to open in April 2017, and the total budget is split between 2021/22 and 2022/23 periods.

The second CfD auction is open only to “less established” technologies, including offshore wind, advanced conversion technologies (with or without CHP), anaerobic digestion (with or without CHP), dedicate biomass with CHP, wave, tidal stream, and geothermal energy.

With the release of the long-awaited auction details, the UK government says it has reaffirmed its commitment announced in March 2016 to spend £730 million of annual support on renewable electricity projects over the current parliament.

The administrative strike prices for the different generation methods have been set as illustrated in the below table (£/MWh, 2012 prices).

Technology

2021/22

2022/23

Offshore wind

105

100

Advanced conversion technologies (with or without CHP)

125

115

Anaerobic digestion (with or without CHP) (>5MW)

140

135

Dedicated biomass with CHP

115

115

Wave

310

300

Tidal stream

300

295

Geothermal

-

-

The government is collecting evidence to determine the geothermal energy prices, which will be published later after a consultation period.

A maximum of 150MW – equivalent to a budget of £70 million – will be applied to “fuelled” biomass technologies, including dedicated biomass, advanced conversion technologies, and anaerobic digestion.

Business and Energy Secretary Greg Clark said: “We’re sending a clear signal that Britain is one of the best places in the world to invest in clean, flexible energy as we continue to upgrade our energy infrastructure.

“This is a key part of our upcoming industrial strategy, which will provide companies with the further support they need to innovate as we build a diverse energy system fit for the 21st Century that is reliable while keeping bills down for our families and businesses.”

The government expects there to be sufficient interest from developers for a competitive auction to be triggered, as the budget would be insufficient to meet all applications at their administrative strike price.

This article was written by Ilari Kauppila, deputy editor at Bioenergy Insight





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