RenewableUK says today’s publication by the Department of Energy and Climate Change of the draft budget for the first allocation round of Contracts for Difference (CfDs) brings a greater level of clarity on the future level of financial support for renewable energy projects.
However the trade association, which represents the wind, wave and tidal energy industries, has expressed disappointment that insufficient funding is being made available to ensure the UK’s successful transition from fossil fuels to clean energy sources.
RenewableUK’s Director of Policy, Dr Gordon Edge, said: “The long-awaited publication of the indicative budget available for new renewable energy projects in the first allocation round of Contracts for Difference provides information which is critical for developers and the supply chain to support future investment in the clean energy sector.
“Having studied the details, we need to sound a note of caution. Whilst the industry understands the pressures facing Government when setting this budget, we are disappointed with the overly cautious approach used. Although we appreciate that it’s necessary to hold back budget for future years in order to allow potentially cheaper projects to come forward later, this initial release of the draft budget risks being insufficient to drive industrialisation, competition and cost reduction.
“A successful launch of the first CfD allocation round is fundamental to building investment and industrial momentum. An excessively cautious approach affects the UK’s offshore wind industry in particular. The sector needs long term visibility to give the UK the best chance of securing a strong local supply chain to drive down the cost of offshore wind energy. Failure to set even an indicative budget for the second allocation round at this crucial stage means that visibility is now extremely limited.
“Established technologies, including onshore wind, continue to have a key role in contributing to new generation. Onshore wind is set to become the cheapest form of new generation from any type of energy source by 2020, though this is dependent on deployment being allowed to continue. An overly restrictive budget for the established group of technologies will mean a lower level of delivery of the cheapest technologies, risking consumers paying more than they should have to”.
RenewableUK sees today’s announcement as clear evidence that the next Government will need to act quickly and decisively to set out its ambition beyond 2020. Dr Edge continued:
“The Government elected in May 2015 will need to prioritise setting out a clear framework for the sector beyond 2019, including longer term budgets for CfD allocation. Wind, wave and tidal energy are all vital components of our future energy supply. Investors need confidence now in order to bring forward the much-needed investment that will reduce costs and capture the maximum possible economic benefits for the UK from wind, wave and tidal energy”.