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£60M on offer for renewable energy projects

Wind energy

£60M of funding for renewable energy projects is up for grabs as developers prepare for next round of government funding.

The Department for Business, Energy and Industrial Strategy (BEIS) has confirmed that it will be launching the next round of Contracts for Difference (CfD) auctions for renewable energy projects in May this year.  

This is the third CfD auction and will see the inclusion of remote island wind (RIW) for the first time; a new technology which was not previously eligible. RIW is the construction of on-shore wind farms on remote islands such as those off the coasts of Scotland, which due to their remote location, generate more power than the same turbines located on the mainland. 

Energy from waste, landfill gas and solar projects were all eliglbe under the first CfD but have since been removed in favour of “greener” alternatives. 

Previous schemes to benefit from the CfD auctions include the 1.3GW Hornsea Project 2 Windfarm, the 950MW Moray Offshore Windfarm, and an 85MW biomass plant in Scotland. 

BEIS previously announced a budget of £60M for the auction, which will decide the future of renewable energy projects in the UK. Bids for the CfD are submitted sealed. 

The £60M is expected to support the delivery of between 4GW-6GW of renewable energy for the UK.

Projects will be divided into two delivery terms, first for 2023-2024 and the second for 2024-2025. 

Developers can apply for 15-years worth of funding for their projects which will see them receive a guaranteed rate, called a strike price, for the energy they generate. If the energy is sold on the wholesale market for a lower price than the strike price, the developers will be reimbursed the difference. 

A BEIS spokesperson said: “The UK is a world leader in renewables, and in November the Government announced a budget of £60 million for the next clean electricity auction. The fall in costs of renewable electricity means that we are confident in securing more generation than the last auction at a lower cost for consumers.”

The last CfD took place in 2017, following the first in 2015. Strike prices for offshore wind energy halved between the last two auctions.  

Technology Type 2023/24 Strike prices (2012 Prices) (£/MWh) 2024/25 Strike prices (2012 Prices) (£/MWh) 2015/16 Strike Price (First CfD)

Conversion Technology 

113 

111 

155

Anaerobic Digestion (>5MW) 

122 

121 

150

Dedicated Biomass 

121 

121 

125

Geothermal 

129 

127 

145

Offshore Wind 

56 

53 

155

Remote Island Wind (>5MW) 

82 

82 

n/a

Tidal Stream 

225 

217 

305

Wave 

281 

268 

305

Contracts awarded through the auction will be managed by the Low Carbon Contracts Company (LCCC), which is entirely owned by BEIS and National Grid acts as their delivery partner. Ofgem handles complaints for the CfD process.  

The auction is expected to open on the 29 May 2019.  

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