Energy Minister (): I would like to advise
the House that today I am laying draft regulations to implement
two amendments to the Contract for Difference (CfD) scheme in
time for the next allocation round; supporting the government's
clean energy superpower mission to deliver clean power by 2030
and accelerate to net zero.
The CfD scheme is the government's main mechanism for supporting
new low-carbon electricity generation projects in Great Britain.
Awarded through regular, competitive allocation rounds, it
guarantees a set price per MWh of electricity for 15 years,
indexed to inflation. The income stabilisation that it provides
for the generator, makes projects that have high up-front costs
but long lifetimes and low running costs attractive to investors
and lenders, reducing cost of capital and overall project cost.
It also protects consumers when electricity prices are high.
The latest allocation round, AR6, was a great success, securing a
record-breaking 131 projects and 9.6 GW of renewable electricity
capacity. But we must continually evolve the CfD scheme to drive
progress towards the 2030 clean power target and ensure it
reflects the global challenges and opportunities faced by the
renewables sector.
These amendments to legislation will extend the option to phase
projects under the CfD to floating offshore wind and enable
repowered onshore wind projects to apply for a CfD provided they
meet certain criteria.
This Government has committed to radically increasing the UK's
offshore wind capacity. Floating offshore wind is an emerging
technology which allows us to access wind resource in deeper
waters, which tend to be further from shore with higher, more
consistent wind speeds. CfD phasing policy allows offshore wind
projects with a maximum capacity of 1,500MW to be built in up to
three stages. Previously this only applied to fixed bottom
offshore wind. The extension of phasing to floating offshore wind
will benefit this emerging sector, de-risking the construction
process and helping developers and the supply chain to work with
more certainty. This, in turn, will reduce investment risk and
enable the construction of larger floating windfarms, as
investors gain confidence in successful project completion.
The other amendment concerns onshore wind. From the late 2020s
onwards, it is likely that a significant proportion of current
onshore wind sites will reach the end of their operational life.
When a project comes to the end of its operating life, the
generator can choose to decommission permanently, extend its
life, or repower. Repowering would require decommissioning and
recommissioning of the existing site, incurring similarly high
upfront capital costs to that of a new build. Allowing projects
to apply for a CfD to repower, in contrast to retiring, could
make a significant contribution to the 2030 clean power goal.
This amendment offers revenue certainty for onshore wind projects
that may otherwise struggle to repower. Without it, we may lose
the opportunity to retain and increase this renewable capacity
and the societal and economic benefits this confers.
This draft legislation laid today is another important step
forward in delivering clean power, shielding families from
volatile gas prices, and establishing the UK as a clean energy
superpower.
