UK doubles down on renewables with 12 GW Contracts For Difference Round Four (CfD4)

November 25, 2020

UK Energy Ministry BEIS will allocate supports for up to 12 GW of new renewables projects at its Contracts for Difference Round Four (CfD4) auction which will open late next year.

The round will feature three pots for different technologies, which will all compete for 15-year government subsidies. The 12 GW capacity is over twice as large as 2019’s 5.8GW CfD3.

  • Offshore wind will have its own standalone ‘Pot 3’, in line with plans mooted during consultations on the round earlier this year.
  • ‘Pot 1’ will comprise established technologies including onshore wind and solar – marking the first time since 2015 these two technologies can bid for supports.

Scottish Renewables policy director Morag Wilson said the association welcomed the CfD scheme and its inclusion of onshore wind and the dedicated pot for offshore wind and support for innovative technologies such as floating wind.

Wilson added: “However, differences between Scotland and the rest of the UK need to be accounted for in all areas to ensure there is a level playing field for Scottish projects, particularly the disproportionate impact transmission charging costs pose for Scottish projects.

“Not addressing these disadvantages will hamper progress towards a geographically diverse energy system and reaching the level of deployment needed to achieve net zero.”

Solar Trade Association chief executive Chris Hewett said: “Today’s announcement opens the door to significant numbers of subsidy-free solar projects being developed over the next few years.

“Many responses, including our own, highlighted the merit of having more frequent auctions, and this is something that the Government must implement if it is to maximise the economic and climate potential of renewables.

“Large solar projects can be deployed rapidly, offering a swift, job intensive contribution to a green economic recovery.”

  • Next year’s auction will also be the first time floating offshore wind can compete.
  • Floating projects will be placed in a ‘Pot 2’ for less established technologies alongside Advanced Conversion Technologies and tidal stream.

Former coal stations converted to biomass generation will be excluded from the round.

“The UK is a world leader in clean energy, with over a third of our electricity now coming from renewables,” said UK Energy Minister Kwasi Kwarteng.

“That huge achievement is thanks to the government’s Contracts for Difference scheme.”

Kwarteng said CfD4 will build on the ‘Ten Point Plan’ for a low-carbon future that was outlined by UK Prime Minister Boris Johnson last week.

“The new plans…put us firmly on the path towards building a new, green industrial revolution,” he said.

The Government will meanwhile launch a fresh consultation on new proposals for the supply chain plan mechanism in a bid to boost local content levels.

The proposals are designed to increase the clarity, ambition and measurability of commitments made by renewable project developers when they bid for contracts in the CfD scheme, and to introduce new measures if they subsequently fail to deliver on those commitments.

“Next year’s renewable power auctions can unlock over £20bn of new investment in the economy and secure an unprecedented amount of low cost, clean electricity for consumers using the full range of renewable technologies we have available,” said RenewableUK chief executive Hugh McNeal.

McNeal welcomed the round’s inclusion of onshore wind.

“As one of our lowest cost, large scale power options, onshore wind has a vital role to play in meeting the challenge of net zero and the re-opening of CfD auctions is an important step to ramp up investment in this key technology,” he said.