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CfD round 4 to secure up to 12 GW of renewables

By: Tom Russell 24/11/2020 BEIS

General Windfarms

The UK government has set out its plans for the fourth round of the Contracts for Difference (CfD) scheme. Scheduled to open in late 2021, the fourth round aims to increase the capacity of renewable energy from the 5.8 GW achieved in the last round to up to 12 GW.

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.

The fourth round will see three ‘pots’ for renewable technologies. Pot 1 includes established technologies – such as onshore wind and solar PV. It is the first time since 2015 that solar and onshore wind projects will be able to bid for support.

Pot 2 includes less-established technologies – including floating offshore wind, Advanced Conversion Technologies and tidal stream. Floating offshore wind technology allows projects to be built further away from the shoreline where it is windiest and increasing the UK’s renewable energy capacity even further.

Government support for offshore wind generation has seen the cost of it fall by two thirds in the last 5 years. Given its long-term potential to support the country’s 2050 net zero target, offshore wind projects will compete in their own pot - titled 'Pot 3 - rather than against other technologies as they have previously.

Following the first consultation on the fourth CfD round, the government has also announced today (24 November 2020) that a second consultation is being launched on new proposals for the Supply Chain Plan. The consultation closes at 11:45pm on 18 January 2021.

The government is now proposing more detailed changes to the Supply Chain Plan policy, which are designed to increase the clarity, ambition, and measurability of developers’ commitments, and ensure that those commitments are delivered.

In addition, the government is inviting views on the government’s proposal on several proposed drafting changes to the CfD contract to implement decisions taken on the following policies: floating offshore wind, negative pricing, coal-to-biomass conversions, milestone delivery date. minor and technical changes to improve the operation and clarity of the contract.It is also inviting views on its decision to not to extend phasing to floating offshore wind projects.

Energy Minister Kwasi Kwarteng said: "The UK is a world leader in clean energy, with over a third of our electricity now coming from renewables. That huge achievement is thanks to the government’s Contracts for Difference scheme.

"The new plans set out today build on the Prime Minister’s Ten Point Plan and put us firmly on the path towards building a new, green industrial revolution."

Today’s announcement follows last week’s unveiling of the Prime Minister’s Ten Point Plan, which outlines an ambitious vision of a low-carbon future for the UK, and aims to ensure that clean energy continues to play a key role in ending our contribution to climate change entirely by 2050. The UK Prime Minister pledged to mobilise £12 billion of government investment to support this plan.

The ten point plan is part of the Prime Minister's new plans to Build Back Greener, making the UK the world leader in clean wind energy. Boris Johnson pledged that every UK home will be powered by electricity from offshore wind farms by 2030 and that £160m will be spent on ports and factories across the country to manufacture the next generation turbines.

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

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CfD round 4 to secure up to 12 GW of renewables

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