UK energy and clean growth minister Claire Perry is to confirm that the government will hold clean energy auctions in 2019 and every two years from then on, signalling support worth up to £557M (US$732M) for the industry.
Regular auctions will encourage long-term investment to help reduce the cost of energy, said the Department for Business, Energy & Industrial Strategy.
Announcing a raft of measures on a visit to the Offshore Renewables Catapult, the Minister will say: “The UK renewables sector is thriving, with more offshore wind capacity here than anywhere else in the world and 50% of electricity coming from low-carbon sources last year in what was our greenest year ever.
“For the last decade the offshore wind industry has been a great British success story, increasing productivity, raising earnings and improving lives in communities across the UK."
"Today the sector gets the certainty it needs to build on this success through the next 10 years.
“With wind turbines already providing 15% of the UK’s electricity, today’s fresh vote of confidence in the sector will secure its position as a global leader in a thriving industry, enhance confidence and encourage businesses to make long-term investment.
“The government has already met its ambition set out in the Clean Growth Strategy to produce 30% of its power from renewable sources by 2020/21 and this fresh support will see the UK secure its position as a world leader in low carbon energy.”
The announcement confirms that the next contracts for difference (CfD) allocation round for less established technologies such as offshore wind will open by May 2019.
The government will hold another allocation round in 2021 and auctions around every two years. Depending on the price achieved, these auctions will deliver between 1 GW and 2 GW of offshore wind each year in the 2020s.
The CfD scheme is the government’s main mechanism for supporting new renewable energy generation projects. Contracts are awarded in a series of competitive auctions, with the lowest price bids being successful – which drives efficiency and cost reduction.
The scheme has been a success, delivering substantial new investment and helping deliver significant reductions in the costs of some renewable technologies.
The second CFD auction in 2017 saw the clearing price for offshore wind (£57.50/MWhr in 2012 prices) halved compared to the first auction (2015) and secured 3.3 GW of renewable electricity capacity.
Offshore Wind Industry Council and UK country manager at Ørsted Benj Sykes, said, "As well as cost-effectively reducing carbon emissions to meet our climate change targets, the offshore wind industry is powering the clean economy, bringing investment, skilled jobs and supply chain opportunities to businesses up and down the UK.
“Our sector has proposed a transformative ambition to deliver at least 30 GW by 2030, enough to meet more than a third of the country’s electricity needs, which in turn could increase exports five-fold, create thousands of skilled jobs and reduce electricity system costs.
“Today’s announcement is a vote of confidence in our industry and will directly enable more investment in the UK.”