Following on from the announcement of its ten-point "green revolution plan" last week, the UK government has confirmed plans for the latest contract for difference (CfD) allocation round (known as "ALR 4") for low carbon electricity generation.
The CfD scheme has been successful in driving the deployment of renewables at scale in Great Britain, in particular for offshore wind. The last allocation round, in September 2019, saw contracts awarded to 5.8GW of new renewable energy projects, with an intention to hold a CfD auction every two years to provide industry with certainty to invest in renewables.
In an effort to drive forward its net zero commitments, the latest allocation round will include the following key changes:
- Doubled capacity: auctioned capacity of up to 12GW.
- Onshore wind and solar: allowed to participate in CfD auctions for the first time since 2015.
- Separate offshore wind pot: the UK government sees offshore wind as key for delivering its net zero targets and therefore, offshore wind will, for the first time, compete in its own category rather than against other technologies.
- Three pots of capacity: the three pots will be:
- Pot 1 - established technologies: including small scale onshore wind and solar PV, hydro and energy from waste, landfill/sewage gas
- Pot 2 - less established technologies: including floating offshore, advanced conversion technology, geothermal, tidal/wave and biomass
- Pot 3 - offshore wind
Allocation round 4 is scheduled to take place at the end of 2021.
"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,” Energy Minister Kwasi Kwarteng