UK government has outlined the plans for the next Contracts for Difference (CfD) auction where companies will compete for the first £290 million worth of contracts for renewable electricity projects.
The application process for the next CfD allocation round will open in April 2017, and is meant for less established technologies including wave, tidal stream, and offshore wind, among others.
The draft strike prices, based on 2012 prices that will be confirmed at least 10 days ahead of the allocation round opening, are set at 310 £/MWh for wave, and 300 £/MWh for tidal, for projects deploying in 2021/22.
For projects deploying in 2022/23, the strike price for wave is set at 300 £/MWh, and tidal at 295 £/MWh.
However, the ‘minima’, a minimum level of deployment for which money would be specifically allocated, has not been specified for wave and tidal.
Welcoming the announcement of the CfD allocation plans, Hugh McNeal, RenewableUK’s Chief Executive, said: “We will continue to work with Government to find a way forward for the UK’s innovative wave and tidal energy industries, but we’re disappointed that no minimum level of deployment has been set for them.
“These ground-breaking technologies can replicate the cost reduction we’re seeing in offshore wind and deliver industrial benefits to Britain. We can’t risk falling behind and handing our global lead to other countries.”
Reacting to the news of UK’s CfD allocation plans, Rémi Gruet, CEO of Ocean Energy Europe, a Brussels-based industry group representing the ocean energy sector in Europe, said:
“The European ocean energy industry welcomes the inclusion of wave and tidal in the latest support mechanism put forward by the UK government this morning. The CfD strike price should enable the sector to bring forward part of a significant pipeline of projects.
“Clarity remains needed on how support will be ring-fenced for emerging technologies. These cannot be expected to compete from day one with more established industries, who have driven down costs by deploying volumes. The industry has shovel-ready projects in the UK, and looks forward to engaging with the government to make sure these projects are supported, as they are strategically important to retaining its global leadership in ocean energy.
“The economic opportunity presented by wave and tidal is significant, and should be an integral part of the UK’s and Europe’s industrial strategy.”
Reaffirming the UK government’s commitment to spend £730 million of annual support on renewable electricity projects over this parliament, the second CfD auction is expected to result in enough renewable electricity to power around one million homes and reduce carbon emissions by around 2.5 million tonnes per year from 2021/22 onwards.
Greg Clark, Business and Energy Secretary, said: “We’re sending a clear signal that Britain is one of the best places in the world to invest in clean, flexible energy as we continue to upgrade our energy infrastructure.”
Other technologies covered in the next allocation round also include geothermal, Advanced Conversion Technologies, Anaerobic Digestion (>5W), and Dedicated biomass with Combined Heat and Power projects.