The Chancellor's Budget today confirmed £730m to be dedicated to the next wave of Contracts for Difference (CfD) auctions for onshore wind and "other less-established technologies" - double the amount put into the first CfD auction.
"The Energy Secretary and I are announcing £730m in further auctions to back renewable technologies and we're now inviting bids to help develop the next generation of small modular reactors," Osborne said.
The government will auction Contracts for Difference of up to £730m this Parliament for up to 4GW of offshore wind and other less established renewables, with a first auction of £290m.
Support for offshore wind will be capped initially at £105/MWh (in 2011-12 prices), falling to £85/MWh for projects commissioning by 2026
Commenting on the Chancellor’s Budget Speech, RenewableUK’s Deputy Chief Executive Maf Smith said: “We welcome the Chancellor’s announcement that funding will be available for future rounds of competitive auctions to support offshore wind farms.
“The budget is tight but we’re up for the challenge.
“We’re confident that today’s announcement will deliver 3.5 gigawatts of new offshore wind capacity between 2021 and 2025 – powering more than 3.5 million British homes.
“This budget shows that offshore wind will be cheaper than new nuclear power and competing with gas by 2025, making it even better value for money.
“The industry is playing its part continuing to drive down costs relentlessly – we released a report this week showing in detail how we’re ahead of what was predicted.
“Today’s announcement will increase confidence, attracting billions of pounds of investment in the UK’s supply chain.
“It’s long term commitments such as this which will keep the UK as the number one destination in the world for investors in this technology.”
Nick Molho, Executive Director of the Aldersgate Group said: “The government’s commitment to auction Contracts for Difference of up to £730 million during this Parliament for up to 4GW of offshore wind or other less established renewables is a positive step forward.
“This gives the offshore wind industry some confidence to continue to invest in new projects and drive down costs, although a more ambitious level of deployment would accelerate cost reductions and deliver greater supply chain benefits.
“But much more still needs to be done in order to address the concerns of investors recently highlighted by the Energy and Climate Change Committee.
“We now look towards the government’s decision on the fifth carbon budget, the Autumn Statement and its emissions reduction plan to provide confidence that the UK is on the right track to decarbonise cost effectively.
“We will need a clear strategy to increase investment in energy efficiency and low carbon heat, support the deployment of mature low carbon generation technologies such as onshore wind and solar and the demonstration of carbon capture and storage technology.”
