Offshore renewables to compete for GBP 235m in UK's 1st CfD auction

Oct 2, 2014 - Projects in the UK based on less established renewable energy technologies will be competing for GBP 235 million (USD 380m/EUR 301m) in subsidies in the first auction under the Contract for Difference (CfD) scheme.

The government has allocated GBP 155 million for offshore wind, marine and other projects in that group which will be commissioned from 2016/17 onwards, the Department of Energy and Climate Change (DECC) said today. The balance of GBP 80 million will be available for projects planned for completion from 2017/18 onwards.

The first allocation round also has a subsidy budget amounting to GBP 65 million for established technologies, such as 5-MW-plus onshore wind and solar projects as well as small hydropower and others. That budget has also been divided in two portions -- GBP 50 million for projects commissioning in 2015/16 and GBP 15 million more for schemes that will be completed later.

The CfDs, which are part of the UK Electricity Market Reform, will replace the renewable obligation (RO) for all new renewable projects from April 2017. Under that new mechanism, renewable energy firms will receive a variable premium over the wholesale electricity price until the total amount reaches pre-defined "strike prices".

Individual projects that win the auction will receive support for as many as 15 years, meaning that the GBP 235 million for less established and the GBP 65 million for established technologies will represent the combined spending per year. The total amount of GBP 300 million is GBP-95-million more than what was planned in July.

The budgets for the next auction will be confirmed next year, the DECC noted. It is planned to include GBP 50 million more in support for established technologies.

(GBP 1.0 = USD 1.616/EUR 1.279)

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