Eight major renewable electricity projects are unveiled as part of the government’s world leading electricity reforms, giving a massive boost to green growth and green jobs.
By 2020, the projects will provide up to £12 billion of private sector investment, supporting 8,500 jobs, and they could add a further 4.5GW of low-carbon electricity to Britain’s energy mix (or around 4% of capacity), generating enough clean electricity to power over three million homes.
Once built, the successful projects will contribute around 15TWh or 14% of the renewable electricity we expect to come forward by 2020, helping to put the UK well on the way to meeting the UK’s renewable energy target. They will also reduce emissions by 10 MtCO2 per year compared to fossil fuel power generation.
The projects have been offered under Contracts for Difference (CfD), which form part of Government’s world leading Electricity Market Reform programme. They include offshore wind farms, coal to biomass conversions and a dedicated biomass plant with combined heat and power.
Energy and Climate Change Secretary Edward Davey said:
“These contracts for major renewable electricity projects mark a new stage in Britain’s green energy investment boom.
“By themselves they will bring green jobs and growth across the UK, but they are a significant part of our efforts to give Britain cleaner and more secure energy.
“These are the first investments from our reforms to build the world’s first low carbon electricity market - reforms which will see competition and markets attract tens of billions of pounds of vital energy investment whilst reducing the costs of clean energy to consumers.
“Record levels of energy investment are at the forefront of the Government’s infrastructure programme and are filling the massive gap we inherited. It’s practical reforms like these that will keep the lights on and tackle climate change, by giving investors more certainty.”
There has been significant growth in renewable electricity sector with the renewables’ share of total electricity generation more than doubling since 2010. We are supporting this growth to continue through Electricity Market Reform and expect to deliver over 30% renewable electricity in 2020.
Today’s announcements, the first step in the new EMR Contracts for Difference regime, will make a significant contribution towards that ambition by, in 2020, delivering around 15TWh - that’s 5% of total electricity generation - from today’s 8 projects alone.
The eight successful projects have been awarded contracts under the Final Investment Decision (FID) Enabling for Renewables process, allocating the first CfDs that are being introduced through the Electricity Market Reform programme. Under CfDs, generators and developers receive a fixed strike price for the electricity they produce for 15 years.
These contracts are vital to give investors the confidence they need to pay the up-front costs of major new infrastructure projects.
The contracts are supported by the new legislative framework introduced through the Energy Act 2013. Further CfDs will be made available in the autumn and the Government intends to publish further details of the allocation process alongside the Government Response to the January Consultation on Competitive Allocation of CfDs shortly.
Together, the successful projects will help provide a secure, affordable supply of electricity and support skilled jobs, boosting growth, supply-chains and businesses across the country.
Notes for Editors
Final Investment Decision Enabling for Renewables
- The Investment Contracts (or early Contracts for Difference) that have been awarded to projects today set out the contractual terms on which projects will benefit from financial support. They are based on the strike prices published on 4 December 2013.
- The table below provides a summary, by technology, of the number and capacity of successful projects.
||Beatrice Offshore Windfarm Limited
||Outer Moray Firth, Scotland
|Burbo Bank extension
||Dong Energy Wind Power A/S
||Liverpool Bay, at the entrance to the River Mersey
|Drax Unit #1
||Selby, North Yorkshire
||Dudgeon Offshore Wind Limited
||The Wash north of Cromer, Norfolk
||Dong Energy Wind Power A/S
||North Sea, off the Yorkshire coast
||Lynemouth Power Limited
||MGT Power Limited
||Dedicated biomass with combined heat and power
||Dong Energy Wind Power A/S
||Irish Sea 19 km WSW off the Walney Island coast in Cumbria
Successful projects by technology
- The Final Investment Decision (FID) Enabling for Renewables process was launched in March 2013. There were two phases:
- Phase 1: Qualification for participation and
- Phase 2: Investment Contract allocation.
- More renewable electricity projects applied to the process than we can afford. We originally received 57 applications. In December, sixteen projects were told that they had provisionally scored above the Phase 2 minimum threshold evaluation criteria. These projects received a draft Investment Contract for consideration and were invited to submit a binding application, confirming that they wished to receive a contract, by 25 March 2014.
- In December, these sixteen projects were also told their provisional ranking against all projects and those of the same technology, and whether they were provisionally within the available budget based on this ranking. Ten projects were told that they were provisionally within the available budget.
- Since then, two projects have withdrawn from the process, fourteen projects submitted binding applications for Investment Contracts.
- DECC completed a review of binding applications and carried out a final affordability assessment. This confirmed the successful projects based on their final score and rank position.
- We expect the investment contracts for the successful projects to be signed and laid in Parliament in May 2014, which is when they will take legal effect.
Renewable energy stats:
- There has been significant growth in renewable electricity sector with the share of total electricity generation from renewables more than doubling since 2010, and reaching a record 17.6 % in the fourth quarter of 2013.
- 4.2% of UK energy consumption (which is made up from electricity, heat and transport) came from renewable resources in 2012, up from 3.8% in 2011. This 2012 figure is greater than our first interim target of 4.0%. Across 2011 and 2012 the UK achieved an average of around 4.0% with a small shortfall against the precise target value being within the margin of error around the estimate.
- That means the proportion of total UK energy from renewables has increased by a third under this Government, from 3.0% in 2009 to 4.2% in 2012.
Energy Act and EMR Secondary Legislation
- The Energy Act, which set out the legislative framework for EMR, received Royal Assent on 18 December 2013 following completion of its parliamentary passage on 11 December.
- The Government expects to lay final regulations in late spring of 2014. Subject to the will of Parliament and State Aid approval, this will allow Secondary Legislation to come into force in the summer.
Contracts for Difference
- Further CfDs will be made available in the autumn
- The Government intends to publish further details on CfD allocation alongside the Government Response to the January Consultation on Competitive Allocation of CfDs shortly.
- We have also published an updated overview of investment in renewables today.
- Interactive map of renewables jobs and investment
- The report shows the significant progress made against the energy investment challenge inherited in 2010 where energy projects accounted for nearly 60% of the UK National Infrastructure Plan (£218bn out of the £377bn).
- Since 2010, investment worth more than £45 billion has been secured in electricity infrastructure alone – the majority of this investment has been in renewable technologies.
- The Department’s analysis previously identified a need for up to £110bn of electricity infrastructure investment between 2013 and 2020. We are delighted to see nearly £14bn invested against this £110bn target in 2013 with a consequent reduction in the future estimated spend requirement - which now stands at up to £100bn through to 2020