9 November 2016

We have taken some time to digest the latest renewable energy policy announcements and review the winners and losers. Overall the positive news is that there is still budget for a CfD auction and the government is still showing commitment to support offshore wind in particular.

Below is a short version of the full brief sent to Regen members (membership details here).
 
Full details are here: https://www.gov.uk/government/news/government-sets-out-plans-to-upgrade-uk-energy-infrastructure-and-increase-clean-energy-investment

You can hear directly from and quiz Clive Maxwell, director general, Department of Business, Energy and Industrial Strategy (BEIS) on the CfDs and the future of government energy policy at Renewable Futures on 29 November – details of the event here.

Draft budget notice announcement for two further CfD rounds
We now have confirmation that there is a budget of £290 million, set for a CfD round of less established technologies, for projects in delivery years 2021-22 and 2022-23. This auction is available to ‘Pot 2‘ less established technologies only.
 
The published “administrative” strike prices for the two delivery periods are set out below. However, previous auctions have cleared at prices significantly below the strike price, and in what is expected to be a highly competitive process these prices are now little more than a rough indication of relative costs.

Solar and onshore wind
This morning’s announcements have made no reference to any budget release for the Pot 1 technologies (solar and onshore wind) auction and it seems safe to infer that the government has no plans for a CfD auction for solar and onshore wind. So, largely for political reasons, the cheapest forms of electricity generation remain shut out of the EMR process.

Wave and tidal stream technologies
The strike prices for marine energy remains high. However, the 100 MW reserved ‘minima’ for wave and tidal has not been extended beyond the current delivery plan period which will end in March 2019 (outside the timeframe of this allocation round), which means in effect that wave and tidal projects that wish to bid into the forthcoming auction will have to do so in direct competition with offshore wind and with the other Pot 2 technologies. In other words, the high headline strike price is of no advantage to these embryonic technologies. 
 
Offshore Wind
The overall CfD programme is clearly aimed at supported offshore wind and the government has previously indicated that it would like to see a further 4 GW of offshore wind technology deployed in the next delivery period.
 
Fuelled technologies
In a further boost for offshore wind the potential competition ‘Fuelled Technologies’ (Dedicated Biomass with CHP, Advanced Conversion Technologies and Anaerobic Digestion.) will be subject to a cumulative maximum of 150 MW (equivalent to a budget maxima of £70 million in 2012 prices).  The logic for limiting ‘Fuelled Technologies’ is not set out.

Author: Merlin Hyman

Contact: samaa@regensw.co.uk