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Developers of UK Wind and Solar Farms will be offered a long -term subsidy contract as ministers try to promote investment in renewable projects in a dialect to meet the country’s clean power goals.
The government on Tuesday announced the expansion of the “Contracts for Difference” scheme, causing the contract period to 20 years since 2013.
It argued that the move would spread the cost of construction of infrastructure over a long period of time and reduce the financing costs for developers by reducing project risks.
This decision can increase concerns over renewable energy projects, which are receiving state support for more time than earlier, which can add bills after 2045.
Under the scheme, the government guarantees a certain “strike” value to developers for electricity generated through levy on consumer bills. If the strike price is more than the wholesale price, the developers will have to pay the difference.
Contracts have been important for the development of Britain’s renewable industry in recent years.
The changes announced on Tuesday will apply to fixed-bottom offshore air, floating offshore wind, onshore wind and solar technologies.
The government said, “Along with reducing the impact of the consumer bill in the medium period, the expansion of contracts for selected technologies is expected to promote investors’s confidence in the rapidly competitive and uncertain market,” the government said.
Wind farm developers have taken forward the move that ministers hope that CFD contracts will be the largest auction to open renewable energy in August.
The government wants to trip almost offshore wind capacity and double onshore wind capacity to meet its target of low carbon sources providing 95 percent of Britain’s power generation by 2030. The leaders of the industry consider the target to be extremely ambitious if they are not impossible.
While the UK’s offshore wind region has experienced significant growth, it has been struggling with rising costs and supply-series strains over the years.
After an offshore wind developer dialect in the 2023 era, only 3.8 Gigawatt has been awarded new capacity subsidy contracts in the last two auctions.
This year this year, after developing the 2.4GW Hornsia 4 project, a large part of, is in hold.
In the latest auction round, the price was agreed with offshore wind developers for new projects, which was £ 58.87 per MW. Prices are expressed in 2012 money and sequential to inflation, so that the prices of 2025 will be equal to about £ 85 per MWh. This is slightly higher than the current wholesale prices.
The government said that it had also considered the CFD contracts for a long time, but concluded that the value for the benefit of money beyond 20 years, for example, for 25 years, was “not as strong”.
Announcing several reforms in the CFD scheme today, the government said that it will also relax the eligibility requirements for the “fixed-bottom” offshore wind projects so that they can still apply for a CFD while waiting for the plan.
It argued that this would improve “competitive stress”, although many developers have warned that it could get the developers contracts for projects that they are unable to see.
