Biggest ever renewable support scheme opens to Scottish green energy projects
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Biggest ever round of UK Government’s renewable energy support scheme opens to Scottish applications with £285 million a year funding available for low-carbon technology across Great Britain
Fourth round aims to secure more capacity than three previous rounds combined with additional offshore wind capacity that could generate electricity equivalent to powering around 8 million homes
Scheme strengthens UK energy security, with £24 million a year initially allocated for floating offshore wind and £20m on tidal stream projects helping create jobs in Scotland, while onshore wind is included for first time since 2015 with £285 million a year available across Great Britain, which will help build the next generation of Scotland’s green energy projects.
Renewable energy projects in Scotland can now bid for funding in the fourth round of the Contracts for Difference (CfD) scheme, which is aiming to secure 12GW of electricity capacity across Great Britain – more renewable capacity than the previous three rounds combined. The additional offshore wind capacity resulting from the funding alone could generate enough electricity equivalent to powering around eight million homes.
Compared to the previous round, this is open to an expanded number of renewable energy technologies, with offshore wind, onshore wind, tidal and floating offshore wind projects, amongst others, all eligible to bid for funding in the scheme’s auction process.
Scotland has benefitted significantly from previous rounds of the CfD scheme, with 20 of the 58 projects awarded CfDs to date being in Scotland. This represents 21 per cent of total CfD capacity awarded to date or around 3.4GW of the nearly 16GW total awarded.
The competitive nature of the CfD scheme has been hugely successful in driving the deployment of renewable energy across Great Britain whilst rapidly reducing costs. The scheme’s design has led to the price per unit of offshore wind to fall by around 65 per cent between the first allocation round in 2015 and the third in 2019.
UK business and energy secretary Kwasi Kwarteng said: “The Contracts for Difference scheme has been key to the UK becoming a world leader in renewable energy and we are pushing boundaries even further as we drive down energy bills and safeguard our future by tackling climate change and ensuring we move away from the volatility of global fossil fuel prices.
“With potential bidders from Islay to Inverness and St Andrews to Stornoway, this new funding will bring forward exciting new renewable technologies and push existing success stories to new heights as we support the Scottish oil and gas industry’s transition to green energy.”
A total budget of £285 million a year has been allocated to the fourth round, with £200 million available for offshore wind, £75 million for emerging technologies, such as remote island wind, tidal stream and floating offshore wind, and £10 million for established technologies, such as solar and onshore wind.
Within emerging technologies, £24 million a year has been ringfenced for floating offshore wind projects and £20 million initially set aside for tidal stream projects, demonstrating the UK Government’s support for new, innovative technologies.
The £20 million per year support for tidal stream projects represents the biggest investment into tidal power in a generation, kickstarting a brand-new chapter for the tidal industry that could also have the benefit of creating jobs across the UK.
This will unlock the potential for a thriving Scottish tidal power sector, with the cash boost supporting marine technologies which could benefit the whole of Scotland and the rest of the UK.
Scotland has long been a pioneer for tidal technology, with almost 50 per cent of the world’s installed tidal stream capacity in Scottish waters. Over time Scottish marine technologies have the potential to significantly contribute to the UK’s decarbonisation commitments and could support hundreds of green jobs across the country, with projects currently in development in North-West Scotland.
Onshore wind is competing in an allocation round for the first time since 2015.
Scottish Secretary Alister Jack said: “This surge of UK Government investment into renewables is not only vital for the future of our planet, it will protect jobs in Scotland, create new ones and encourage growth.
“While we support the oil and gas industry in its transition away from fossil fuels, it's heartening to see the renewable energy sector in Scotland evolving.
"Exciting developments in offshore and onshore wind as well as tidal power and floating offshore wind will get a massive boost from this - the biggest award yet in our Contracts for Difference scheme. We’re welcoming bids from projects all over the UK that will see our energy industry thrive while achieving our 2050 net zero goals.”
Subject to the outcome of the competitive auction, it is expected that AR4 will be a major step towards delivering the government’s increased ambition to have 40GW of offshore wind by 2030, including 1GW to come from floating offshore wind, as set out in the Ten Point Plan for a Green Industrial Revolution.
UK energy and climate change minister Greg Hands said: “The Contracts for Difference scheme is proof that green and growth go hand-in-hand as it continues to be a key driver behind the world-leading renewable energy sector that is providing us with secure clean energy, creating jobs across Scotland and opening investment and export opportunities.
“The previous three rounds have allowed us to push forward with the Green Industrial Revolution in Scotland and this round will take us further and faster than ever before while continuing to drive down costs for consumers.”
There has also been a strengthening of the supply chain plan process, so the CfD’s fourth round can support the effective development of open and competitive supply chains and promote innovation and skills in the low-carbon electricity generation sector.
RenewableUK chief executive Dan McGrail said: “This is set to be a landmark auction securing the largest amount of new renewable energy capacity so far, as Ministers have listened to our calls for the overall capacity cap to be lifted to reflect the enormous appetite among companies and investors in UK projects.
“More than 16GW of wind could be ready to compete and over 23GW of renewables overall. We could see investment of over £20 billion in this round, creating thousands of jobs and cutting costs for energy consumers.
"We need a range of renewable technologies to get us to net zero as fast as possible, so it's great to see the development of innovative floating wind and tidal stream projects supported by ring-fenced funding, as we've been advocating. This will enable us to ramp up the roll-out of these cutting-edge technologies, building up massive industrial opportunities for the future, including exports.”
Low Carbon Contracts Company chief executive Neil McDermott, said: “We’ve been supporting new low-carbon power projects through the CfD scheme since its inception, so we’re incredibly excited to see what the next Allocation Round brings. The current CfD portfolio features projects located across the length and breadth of Great Britain, including some of the world’s largest offshore wind farms to date.
“We’ve seen the scheme’s impact on diversifying and increasing the investment needed to support vital new low-carbon power, and this year’s COP26 only served to underline the critical timing of this round.
“We’ve learned a fantastic amount to date and we stand ready to support the ambitious infrastructure that will power the UK’s transition to net zero emissions by 2050, as well as protecting the long-term health of our environment, economies and societies.”
The latest round of the CfD scheme supports the Prime Minister’s 10 Point Plan for a Green Industrial Revolution, which outlines an ambitious vision of a low-carbon future for the UK, and will ensure that clean energy continues to play a key role in ending our contribution to climate change entirely by 2050.
