The UK Government announced an increase in the maximum price offshore wind projects can receive in the next Contracts for Difference (CfD) auction.
The CfD scheme ensures projects receive a guaranteed price from the government for the electricity they produce. Following a review of submitted evidence, the government has raised the maximum strike price these projects can receive in the next CfD auction, set for next year (Allocation Round 6 - AR6) by 66% for offshore wind, and by 52% for floating offshore wind projects. These increases follow the last allocation round which did not receive any bids from eligible developers for floating offshore wind projects. The change has been met with a positive reaction from an industry that is facing challenges in its global supply chain.
The government also opened a consultation on a new CfD Sustainable Industry Reward (SIR) that could be available in a subsequent allocation round (AR7). This scheme could push the UK to become a net exporter of leading clean technology in the offshore/floating wind industry.
Under the proposed SIR scheme, offshore wind and floating offshore wind companies could receive SIR payments in addition to their CfD payments if they reduce carbon emissions in their supply chains. This could involve using more environmentally friendly factories to assemble components, investing in new manufacturing facilities or skills in deprived areas, or finding new, innovative ways to reduce their carbon emissions. The deprived areas include the Channel, North Sea, Irish Sea, and Celtic Sea which could drive investment in local supply chains, a welcome sight for those in the North East of Scotland.
Not only will the changes ensure the UK maintains its position as a world leader in offshore wind and floating wind deployment, but the proposed SIR scheme could also encourage UK innovators to develop measures to manufacture, assemble, and deploy these wind farms sustainably. This could prove to be a valuable step in the journey to creating technology that could be exported around the world, making the industry as a whole globally sustainable.
"This is a vital part of our plan to have enough
homegrown clean energy, bringing bills down for families and
strengthening our energy independence."
Energy Security Secretary Claire Coutinho
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