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BEIS issues supply chain guidance for next CfD auction

4C Offshore | Tom Russell
By: Tom Russell 10/08/2022 BEIS
The Department for Business, Energy & Industrial Strategy (BEIS) has concluded a Supply Chain Plan policy consultation and issued guidance for offshore wind and floating wind projects looking to complete in its next Contract for Difference (CfD) Allocation Round.

To qualify for a CfD Allocation Round, Applicants are required to complete a Supply Chain Plan. The Secretary of State will approve a Supply Chain Plan if satisfied that the generating station is likely to make a material contribution to the development of supply chains. The Supply Chain Plan process aims to combine our supply chain ambitions and decarbonisation objectives.


Outlined in its new guidance document, BEIS revealed that applicants for a generating station with generation capacity of 300MW or more and all Floating Offshore Wind generating stations, will be required to provide National Grid ESO (as Delivery Body) with a statement by the Secretary of State for Business, Energy and Industrial Strategy approving the Supply Chain Plan submitted in respect of that station.

Furthermore, a lighter-touch bespoke Supply Chain Plan has now been created for Floating Offshore Wind projects below 300MW, that has been adapted to the likely size of the projects, and the challenges and maturity of the technology.

Responses by the Applicant to the scored sections of the Supply Chain Plan questionnaire will be assessed to determine award of this Supply Chain Plan Statement of Approval, and hence eligibility to participate in the CfD scheme.

Successful Applicants will also need to receive a further statement from the Secretary of State confirming they have passed their Supply Chain Plan Implementation Assessment, confirming delivery of, or progress against, the activities and outcomes committed to in the scored sections of the Supply Chain Plan, in order to be able to fulfil one of their CfD Operational Condition Precedents (OCP).

Supply Chain Plans will be assessed on the merits of the application, taking into account the particulars of the relevant renewable technology, such as the development stage of the technology and its supply chain.


The criteria includes the level of ambition; and the provision of quantifiable outcome/measurable metrics contained in the responses and supporting evidence, including how delivery will be ensured (e.g., through contractual commitments, details of the company’s internal measurement/monitoring processes including reporting, and obligations). The nature of a project’s technology, and a project’s size, are also taken into account when considering ambition.

BEIS outlined that applicants of projects equal to or greater than 300MW scoring less than 60% in one or more sections of their Supply Chain Plan are unlikely to pass. Furthermore, applicants of Floating Offshore Wind projects under 300MW scoring less than 50% across the whole Supply Chain Plan are unlikely to pass.

This Supply Chain Plan guidance document has been prepared in relation to the Fifth CfD Allocation Round. Details of the Allocation Round, which is planned to open in March 2023, will be made available in due course.

The CfD scheme is the government’s primary method of supporting low-carbon electricity. It encourages investment in renewable energy by providing projects with a stable income, while protecting consumers from paying increased costs when electricity prices are high.

Winners of the last round, the fourth Allocation Round (AR4), were revealed in July with 11 GW of future renewable energy generation. Several offshore wind farms with a combined capacity of of nearly 7 GW are among the winning projects.

With an overall budget of £295 million, the fourth round saw £210 million allocated to the pot supporting offshore wind projects, and a further £24 million for floating offshore wind projects. It also saw the per unit (MWh) price of offshore wind secured in this round reach £37.35/MWh, almost 70% less than that secured in the first allocation round in 2015. The first AR4 projects are due to come online in 2023-24.
 


For more information on offshore wind farms worldwide, click here.

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