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In a release posted on its website recently, the UK Department for Energy Security and Net Zero (DESNZ) announced that the government has “increased the maximum price for offshore wind projects in its flagship renewables scheme to further cement the UK as a world leader in clean energy”.
“Following an extensive review of the latest evidence, including the impact of global events on supply chains, the government has raised the maximum price offshore wind and other renewables projects can receive in the next Contracts for Difference (CfD) auction to ensure it is performing effectively,” DESNZ said in the release.
The maximum price has been increased by 66 percent for offshore wind projects and by 52 percent for floating offshore wind projects, the release highlighted.
“This will help ensure projects are sustainably priced and economically viable to compete in Allocation Round 6 (AR6), building on the success of previous CfD auctions,” DESNZ said in the release.
“These have so far awarded contracts totaling around 30GW of new renewable capacity across all technologies since 2014,” it added.
In AR6, offshore wind will also be given a separate funding pot in recognition of the high number of projects ready to participate, DESNZ noted in the release.
“This will ensure healthy competition among a strong pipeline of projects, helping the UK deliver on its ambition of up to 50GW of offshore wind by 2030, including up to 5GW of floating offshore wind,” it added.
DESNZ highlighted in the release that the CfD scheme ensures renewable energy projects receive a guaranteed price from the government for the electricity they generate, “encouraging continued investment in the UK”.
“First established nearly a decade ago, the CfD has helped reduce the cost of renewables,” DESNZ said in the release.
“It aims to deliver good value to electricity consumers and drive down costs. The government’s ambitions will create tens of thousands of new jobs by 2030, while also delivering the Prime Minister’s priority of growing the economy,” it added.
DESNZ also revealed in the release that the government is increasing maximum bid prices for geothermal by 32 percent, solar by 30 percent, and tidal by 29 percent.
In the release, Energy Security Secretary Claire Coutinho said, “we have started the process of our latest Contracts for Difference auction for renewables, opening in March next year”.
“We recognize that there have been global challenges in this sector and our new annual auction allows us to reflect this,” Coutinho added.
“This is a vital part of our plan to have enough homegrown clean energy, bringing bills down for families and strengthening our energy independence,” the Energy Security Secretary continued.
Graham Stuart, the Minister of State for Energy Security and Net Zero, said in the release, “last year’s Contracts for Difference scheme saw more than 90 clean, homegrown energy projects and … we have shown our ongoing commitment to retaining our global leadership in renewable energy”.
“This critical update to the scheme’s design provides further clarity and confidence to the offshore wind sector and ensures the scheme remains competitive for renewable developers investing in new low carbon technologies,” he added.
“I look forward to securing another year of successful contracts in 2024, creating skilled jobs, reducing emissions, and delivering maximum amounts of reliable clean energy for the British public,” he went on to state.
Exchequer Secretary to the Treasury, Gareth Davies, said in the release, “this scheme has played an indispensable role in driving forward renewable energy projects”.
“Supporting industry to make investments in renewable energy is essential to achieving our net zero goals, vital to attracting investment to our coastal communities, supporting jobs, and levelling up the country,” he added.
“I am proud to see Britain remain at the helm of green energy innovation as we move ahead,” he continued.
When Rigzone asked industry body Offshore Energies UK (OEUK) for comment on the DESNZ release, the organization responded with a statement from Thibaut Cheret, OEUK’s Wind and Renewables Manager.
“We are world leaders in offshore wind energy and … [this] announcement is part of anchoring its future here in the UK,” Cheret said in that statement.
“Nurturing firms’ confidence to invest in Allocation Round 6 is key to delivering robust, innovative projects that boost homegrown energy jobs and our supply chains,” Cheret added.
“Our North Sea energy mix is a British industrial success story and Offshore Energies UK has identified over GBP 200 billion ($248.6 billion) of private capital can be unlocked before 2030 to deliver UK targets in the right investment environment,” he continued.
“So, this is an important step forward and we’ll continue working with policy makers and our members to help the UK become an irresistible place to do energy business,” Cheret went on to state.
The UK produced 80.2 terawatt hours of wind energy in 2022, according to the EI’s statistical review of world energy, which was released earlier this year. That figure marked a 24 percent increase year on year, according to the review.
The biggest wind energy producer in 2022 was China, with 762.7 terawatt hours, followed by the U.S., with 439.2 terawatt hours, and Germany, with 125.3 terawatt hours, the review showed.
To contact the author, email andreas.exarheas@rigzone.com
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