The government in the UK is expected to publish final decisions on amendments to the Contracts for Difference scheme shortly and has confirmed plans to open a new CFD round for offshore wind in May 2019.
In a ‘Contracts for Difference and Capacity Market Scheme Update Report 2018’ published on 5 November, the Department for Business, Energy & Industrial Strategy (BEIS) said details of other allocation round parameters – including a draft budget notice, allocation process and delivery years for successful projects, as well as revised CfD standard terms and conditions for new contracts awarded through the third CfD allocation round – would be published by the end of 2018.
The CfD scheme is the government’s main mechanism for supporting low-carbon electricity generation projects. Contracts for renewable electricity generation projects are awarded in a series of competitive auctions, with the lowest price bids being successful, which drives efficiency and cost reduction. The second CfD auction in 2017 saw the clearing price for offshore wind – £57.50/MWh in 2012 prices – halved compared to the first auction (2015) and secured 3.3 GW of renewable electricity capacity.
Ministers from BEIS announced in July 2018 that the next CfD allocation round for less established technologies, such as offshore wind, will open by May 2019 and that government will hold another allocation round in 2021 and auctions around every two years after that. Depending on the price achieved, these auctions are expected to deliver between 1 to 2GW of offshore wind each year in the 2020s.