In a significant milestone for the renewable energy sector, a record-breaking number of clean energy projects have secured funding from the UK government’s flagship renewables initiative. This achievement marks a pivotal moment in the nation’s journey towards a sustainable, net-zero emissions future. It not only bolsters the economy but also shields households and businesses from the volatility of global gas prices while strengthening energy security.
The latest annual Contracts for Difference (CfD) round witnessed the approval of a total of 95 clean energy projects, surpassing the previous round’s 93 successful bids. The government allocated a substantial budget of £227 million to this round, and this will enable these projects to generate enough electricity to power approximately 2 million homes.
Solar and onshore lead the way
Among the projects awarded funding, solar power and onshore wind projects claimed a significant share, reaffirming their position as key pillars of the UK’s clean energy landscape.
Notably, this round also saw a historic number of tidal energy schemes securing funding, signaling a promising future for this emerging renewable source. Furthermore, in a groundbreaking move, geothermal projects, harnessing natural underground heat sources for electricity generation, made their successful debut in the CfD scheme.
Since its inception in 2014, the Contracts for Difference scheme has played a pivotal role in providing renewable energy projects with a guaranteed price for the electricity they generate. This financial security has instilled confidence in companies to invest in the UK’s renewable energy sector, facilitating its steady growth.
These contracts are awarded through competitive auctions, where projects with the lowest price bids receive approval. This approach ensures value for money for consumers while maintaining a competitive environment that fosters innovation. Notably, this year’s auctions were structured to prevent newer, less-established energy sources from competing for budget allocations with well-established technologies. This strategic decision ensures developers’ certainty and positions the UK at the forefront of the renewable energy industry.
Energy and Climate Change Minister Graham Stuart said:
“We are delighted that our first annual Contracts for Difference auction has seen a record number of successful projects across solar, onshore wind, tidal power, and, for the first time, geothermal.”
“Offshore wind is central to our ambitions to decarbonize our electricity supply and our ambition to build 50GW of offshore wind capacity by 2030, including up to 5GW of floating wind, remains firm. The UK installed 300 new turbines last year and we will work with industry to make sure we retain our global leadership in this vital technology.”
“This year’s record-breaking CfD round builds on years of renewables growth under this government. Just 7% of our electricity came from renewables in 2010, yet in the first quarter of this year it reached 48% and this first annual auction will allow us to go further in powering more of Britain from Britain.”
The UK’s position as a key player in the European offshore market
Over the past decade, the UK has attracted nearly half of all offshore wind investment in Europe, totaling around £48 billion. This remarkable influx of capital has solidified the UK’s position as the primary market for offshore wind investment in the region. Additionally, the government’s £160 million Floating Offshore Wind Manufacturing Investment Scheme supports port infrastructure projects to facilitate the widespread adoption of floating offshore wind technology.
To further bolster the renewable energy industry, the government conducts periodic reviews ahead of each Contracts for Difference round. With the introduction of annual auctions, project developers, particularly in the offshore wind sector, now have more frequent opportunities to participate. This responsive approach enables the government to continuously support the renewable energy sector, maintain investor confidence, and sustain its impressive track record.
£130bn of investment and a significant leap forwards
The government is already preparing for the sixth round of auctions in 2024, marking the second annual auction. Anticipation runs high for the future inclusion of offshore and floating offshore wind projects, reinforcing the UK’s commitment to its ambitious renewable energy targets.
Furthermore, the prospect of approximately $130 billion in private investment pouring into the UK’s energy transition holds the promise of supporting up to 480,000 jobs by 2030, including 90,000 jobs in the offshore wind sector. This surge of investment not only drives economic growth but also solidifies the UK’s position as a global leader in renewable energy innovation and implementation.
Additionally, this activity supports homegrown leaders in the renewables sector, such as Dulas, Polestar Refrigeration and Chillwind turbines.
The record-breaking success of the Contracts for Difference in Allocation Round 5 signifies a significant leap forward for the UK’s renewable energy sector. It highlights the nation’s dedication to achieving its net-zero emissions goal, bolstering energy security, and embracing a diverse range of clean energy sources.
With a robust foundation in place, the UK is poised to continue its leadership in the global renewable energy landscape, driving economic growth and environmental sustainability.
