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UK Government agrees conditionally to 3 CFD auctions by 2020

By: Chris Anderson 18/11/2015 DECC

General Windfarms

> Consultation on ending unabated coal-fired power stations by 2025
> New gas-fired power stations a priority
> Conditional commitment to offshore wind support completes commitment to secure, low-carbon, affordable electricity supplies
> 10GW of offshore wind installed by 2020
> Move towards a smarter energy system

Energy and Climate Change Secretary Amber Rudd has set out her vision for an energy system that puts consumers first, delivers more competition, reduces the burden on bill-payers and ensures enough electricity generation to power the nation.

Speaking at the Institution of Civil Engineers in London today the Energy Secretary revealed her policy priorities and her strategy for putting them into action.

Amber Rudd set out the challenges facing the country’s energy system, saying:

“We now have an electricity system where no form of power generation, not even gas-fired power stations, can be built without government intervention and a legacy of ageing, often unreliable plant."

“Perversely, even with the huge growth in renewables, our dependence on coal - the dirtiest fossil fuel – hasn’t been reduced. Indeed a higher proportion of our electricity came from coal in 2014 than in 1999. “So despite intervention we still haven’t found the right balance.”

The Energy Secretary signalled her intention to develop a cleaner, more secure energy network by consulting on closing coal fired power stations by 2025 She continued:

“One of the greatest and most cost-effective contributions we can make to emission reductions in electricity is by replacing coal fired power stations with gas."

“I am pleased to announce that we will be launching a consultation in the spring on when to close all unabated coal-fired power stations. “Our consultation will set out proposals to close coal by 2025 - and restrict its use from 2023. If we take this step, we will be one of the first developed countries to deliver on a commitment to take coal off the system."

"Opponents of nuclear misread the science. It is safe and reliable."

“But let me be clear, we’ll only proceed if we’re confident that the shift to new gas can be achieved within these timescales."

She also explained that nuclear power had a central role in the UK’s energy future:

“Opponents of nuclear misread the science. It is safe and reliable. The challenge, as with other low carbon technologies, is to deliver nuclear power which is low cost as well. Green energy must be cheap energy. “We are dealing with a legacy of under-investment and with Hinkley Point C planning to start generating in the mid-2020s, this is already changing."

“It is imperative we do not make the mistakes of the past and just build one nuclear power station. There are plans for a new fleet of nuclear power stations, including at Wylfa and Moorside. It also means exploring new opportunities like Small Modular Reactors, which hold the promise of low cost, low carbon energy.”

Offshore wind is subject to conditions

Amber Rudd went on to commit Government support for offshore wind on the condition that it comes down in cost:

"The costs of contracts for offshore wind come down by at least 20% in the last two years. But it is still too expensive."

"So our approach will be different - we will not support offshore wind at any cost.
Further support will be strictly conditional on the cost reductions we have seen already accelerating."

"The technology needs to move quickly to cost-competitiveness. If that happens we could support up to 10GW of new offshore wind projects in the 2020s."

“Today I can announce that – if, and only if, the Government’s conditions on cost reduction are met – we will make funding available for three auctions in this Parliament. We intend to hold the first of these auctions by the end of 2016."

“The industry tells us they can meet that challenge, and we will hold them to it. If they don’t there will be no subsidy. No more blank cheques.”

Rudd explained that by 2025 with a new nuclear power station built and offshore wind competing with other renewables. Unabated coal will be "a thing of the past" and with smart energy coming into its own we will have transformed the UK energy system.

The Government is also committed to taking action on climate change and to meeting the UK’s 2050 target, looking ahead to the conference in Paris in December where an international deal is expected to be agreed.

The Energy and Climate Change Secretary explained:

“Action on climate change is linked to the action we’re taking now to reduce the deficit. It is about resilience now and in the future. But climate change is a global problem, not a local one. Action by one state will not solve the problem. It’s what we do together that counts. And that is why achieving a global deal in Paris next month is so important.

“But climate change will not be solved by a group of over-tired politicians and negotiators in a Conference centre. It will take action by businesses, civil society, cities, regions and countries.

“Paris must deliver that and help unleash the levels of private investment needed. Our most important task is providing a compelling example to the rest of the world of how to cut carbon while controlling costs.”

RenewableUK’s Deputy Chief Executive Maf Smith said responds to today's announcement : “Industry has been looking for clear signals from Government on energy policy to enable the long-term investment in the clean energy infrastructure this country desperately needs.

It’s vital that we have a broad energy mix, and that means ensuring we utilise all our renewable energy resources. Wind power provided almost 10% of the UK’s electricity last year, and that is set to double by 2020. We’re a windy country and we shouldn’t turn our back on this great resource.

Today’s speech provides clarity on where the Government stands on the future of offshore wind, which will give developers the confidence to invest in the British economy. Industry has already shown it can rise to the challenge of reducing costs and offshore wind companies are confident they will be cost competitive with new gas and new nuclear by 2025."

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UK Government agrees conditionally to 3 CFD auctions by 2020

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