The CfD scheme has so far awarded contracts to renewable projects with a total capacity of 26.1GW. Image: Gov.UK.
The solar industry has welcomed the UK Department for Energy Security and Net Zero’s (DESNZ) plans to reform its flagship renewable energy generation scheme to reward applicants for including factors other than price.
This announcement follows the review of the Contracts for Difference (CfD) scheme which began in December 2022.
The CfD scheme, which supports low-carbon electricity projects, along with its predecessor scheme FIDER, has so far awarded contracts to projects with a total capacity of 26.1GW.
In December 2022, the Department for Business, Energy and Industrial Strategy (BEIS) launched a consultation into changes to the CfD scheme’s Standard Terms and Conditions and Private Network Agreement for Allocation Round 5 (AR5).
The fifth CfD Allocation Round opened for applications in March 2023. However, the budget allocation for the latest round, which dropped to £205 million, was criticised by trade association RenewableUK. The group’s economics and markets manager Michael Chesser said: “The budget and parameters set for this year’s CfD auction are currently too low and too tight to unlock all the potential investment in wind, solar and tidal stream projects which the industry could deliver”.
The UK government is now seeking evidence about whether to award CfDs not just on price, but also “based on how much a renewable energy project contributes to the wider health of the renewable energy industry”.
‘Non price factors’ would be considered in the awarding of CfDs, such as supply chain sustainability, skills training, innovation and enabling system and grid flexibility and operability. The announcement suggests that the UK government is taking the problems of a lack of skills and supply chains that rely on imports more seriously.
Graham Stuart, minister of state for energy security and net zero, said that while CfDs had been successful, there was a need to “maximise the scheme’s potential to improve energy security and ensure renewable energy developers can make the necessary investment in supply chains and innovation”.
DESNZ said the announcement followed recommendations made in Chris Skidmore’s Net Zero Review and the report earlier this month from the Offshore Wind Champion Tim Pick.
“Contracts for Difference have played an important role in pushing UK solar generation capacity up to 15 gigawatts. However, Chris Skidmore MP was right to identify that there is room for improvement, beyond merely seeking the lowest bidder,” said Chris Hewett, Chief Executive of Solar Energy UK.
“In our submission to his review, we said that more could be done to secure stronger UK supply chains and that the government must ensure that the workforce has appropriate skills for the net zero world. Together with SolarPower Europe, we also launched the Solar Stewardship Initiative last year, to improve the sustainability of the supply chain. So the reforms outlined today appear to be broadly aligned with our own objectives.”
This article was taken from our sister site Current± and can be viewed in full here.
Solar Power Portal’s publisher Solar Media will host the UK Solar Summit on 27-28 June 2023 in London. The event will explore UK’s new landscape for utility and rooftop solar, looking at the opportunities within a GW+ annual market, and much more. For more information, go to the website.