UK Mulls Changes in its Renewable Program to Increase Generation

The United Kingdom is one of the first few major economies to announce that it would cut emissions to net-zero by 2050. This is a landmark decision, and it confirms the country’s role in the international effort to bring an end to climate change.

The competitive nature of the Contracts for Difference (CfD) program has been successful in driving a substantial number of renewable projects in Great Britain and, in the process bringing down the cost of electricity. The CfD program is the government’s primary mechanism for supporting low-carbon electricity generation in the country.

Last year in September, the country awarded nearly 5.8 GW of new renewable energy at prices well below the administrative strike prices (ASPs) for each of the technologies. This led to a fall in wind prices by 30% from the previous allocation round in 2017.

To attain net-zero emissions by 2050, the Prime Minister set out new plans to make the UK the world leader in clean wind energy. The government also set a new target for offshore wind, increasing the capacity from 30 GW of offshore wind to 40 GW by 2030, and an ambitious 1 GW of this new target will come from floating offshore wind. This latest announcement will include investments of £160 million (~$213.7 million).


The UK recently announced a ten-point plan for a green industrial revolution to advance the country towards net-zero emissions. Under the program, the government will provide funding worth £12 billion (~$15.95 billion) for its implementation and create up to 250,000 new green jobs. The government anticipates three times more investment from the private sector to support the new plan.

The UK recently published a consultation paper on the proposed changes to the CfD program. The consultation was due to close on May 22, 2020, but was later extended to May 29, 2020. Later, on October 06, 2020, it confirmed that the next allocation would take place in late 2021.

The country is also considering maintaining separate pots in the next allocation round to ensure that the CfD program supports a significant low-cost renewable generation in the future. The government noted that separating offshore wind projects that are generally much bigger and have lower costs will allow more appropriate parameters to be set for each pot and reduce the risk of sub-optimal auction outcomes.

The final pot structure for next year’s allocation round will be as follows:

  • Pot 1 (established technologies): onshore wind (>5MW), solar photovoltaic (PV) (>5MW), hydro (>5MW and 5MW)
  • Pot 2 (less established technology): biomass with combined heat and power (CHP) systems, floating offshore wind, geothermal, remote island wind (>5MW), tidal stream, wave
  • Pot 3 (offshore wind): offshore wind

Floating Offshore Wind Projects          

The country had also sought views on defining floating offshore wind as a distinct eligible technology under the CfD program. The government confirmed widespread support for the proposal of considering floating offshore wind as a distinct technology. Considering the consultation responses, the government said it would define floating offshore wind as a specific technology within the CfD. The government also said that the CfD contract for floating offshore wind would be similar in most respects to the terms that apply to offshore wind.

It has proposed to extend the program to March 31, 2035, by amending the CfD regulations 2014.

Having taken into account the responses to the consultation, the government said that it intended to follow through with its plans to develop criteria based on the aims and objectives of the industrial strategy’s five foundations, aligning supply chain plans to support broader government priorities and maximizing the benefits of achieving net-zero.

Coal to Biomass Conversions

The government had also invited suggestions on excluding coal-to-biomass conversions from future allocation rounds of the program.

After going through the consultation responses, it said it would proceed with the changes required to exclude new coal-to-biomass conversions from future CfD allocation rounds. The country is developing a new cross-government biomass strategy that will look at how biomass should be sourced and used across the economy to best contribute to our net-zero target.

Storage

In the consultation, the perceived barriers to storage were also discussed. The government said that it supported the deployment of storage within the electricity network. This flexibility benefits consumers through reduced network management costs and improved integration of renewables generation.

On the issue of the current limit on offshore wind projects, it said that the current limit on offshore wind projects is of an appropriate cap-size, and the 1,500 MW cap should be maintained.

The government also noted that since the CfD allocation round one, there has been a general trend for larger offshore wind projects. Increasing the cap on phased projects could harness economies of scale. However, the extent and scale of potential savings remain uncertain.

“We are aware that several offshore wind projects greater than 1,500 MW have, or are seeking consent. Increasing the phasing cap to accommodate larger projects such as these could see greater levels of offshore wind capacity supported through the CfD in the future,” the statement added.

In March 2020, the UK said that it would co-chair the governing council on the India-led global ‘Coalition for Disaster Resilient Infrastructure.

Last year, the UK also joined the International Solar Alliance (ISA). The ISA is an Indian initiative that was jointly launched by Prime Minister Modi and former French President Hollande on November 30, 2015, in Paris.