Member Article

Renewable energy projects to compete for £200 million budget

Energy and Climate Change Secretary Ed Davey has announced that from October, renewable energy projects will compete for a budget of over £200 million a year.

The funding is for the first allocation round for the new ‘Contracts for Difference’, which provide long-term certainty and reduce risk for investors.

This and other reforms will, according to the government, reduce emissions from the power sector much more cheaply than through existing policies – around 6% (£41) lower on the average domestic electricity bill up to 2030.

A further £50 million is planned for an auction round in 2015, with a total of around £1 billion potentially available later for further projects, including Carbon Capture and Storage, up to 2020-21.

Mr Davey said: “Our plan is powering growth and jobs as we build clean, secure electricity infrastructure for the future. By radically reforming the electricity markets, we’re making sure that decarbonising the power sector will come at the lowest possible cost to consumers.

“Average annual investment in renewables has doubled since 2010 - with a record breaking £8 billion worth in 2013.

“These projects will create green jobs and green growth, reduce our reliance on foreign-controlled volatile energy markets and make sure billpayers get the best possible deal.

“We’re building a secure, low-carbon electricity system that will be the powerhouse of the British economy, supporting up to 250,000 jobs by 2020.”

The funding is managed by the Levy Control Framework, which caps the cost to consumers of renewable energy policies.

The new system is designed to bring more competition and encourage private sector investment in low-carbon electricity generation.

The budget estimate comes after the European Commission confirmed yesterday that the Contracts for Difference, Capacity Market schemes, and five offshore wind projects supported by early Contracts for Difference, are in line with its rules on state aid.

The CfD budget will be split between up to three technology groups – one for more established technologies, like onshore wind and solar, and one for less established technologies like offshore wind, and one for biomass conversions.

Within each group, contracts will be allocated competitively - putting the UK in the forefront of driving down the costs of supporting renewable technologies and delivering better value for consumers.

This was posted in Bdaily's Members' News section by Clare Burnett .