- Department of Energy & Climate Change and The Rt Hon Edward Davey
- Part of:
- Low carbon technologies and Energy industry and infrastructure licensing and regulation
- 4 December 2013
This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
£40 billion of investments are expected in renewable electricity generation projects, following updated contract terms and strike prices published today.
Additional investments of around £40 billion are expected in renewable electricity generation projects up to 2020, following updated contract terms and strike prices published today and wider reforms to the electricity market.
Sixteen renewable generation projects also reached the next stage of Final Investment Decision Enabling for Renewables (FIDeR) process today, which could be supported either through investment contracts or the enduring Contracts for Difference (CfD) regime.
There is currently over 20GW of renewables capacity operational in the UK – a figure that could double by 2020 as a result of the Government’s reforms. We have a very healthy pipeline in key technologies, with a total of almost 11GW of offshore and onshore wind with planning consent and awaiting construction. And if all the 8GW of projects which are proceeding under FIDeR are built through investment contracts or under the enduring CfD regime they could contribute around 30% of the new renewables generation we need by 2020.
The UK is now on track to meet that target, and will have doubled the amount of electricity generated from renewables from 15 per cent to over 30 per cent by 2020.
Energy makes up 58 per cent of the total infrastructure pipeline in Government’s National Infrastructure Plan. Investment in renewables, Carbon Capture and Storage technology, new nuclear and gas is required to replace 10-12 per cent of current power generating capacity, which is due to close over the coming decade.
The updated contract terms and strike prices will help to build a low-carbon energy mix to keep the lights on, reduce emissions and bring green jobs and growth to the UK.
The additional investment will generate enough clean power for 10 million homes, and reduce carbon dioxide emissions by over 20 million tonnes.
Increasing the amount of home-grown renewable energy will boost energy security, reduce reliance on imported fossil fuels, and support up to 200,000 jobs by 2020.
In total, these reforms will help to support up to £110 billion of additional investment across the electricity sector by 2020,helping to insulate Britain from future world gas price increases and boosting jobs and growth in every region of the UK.
Energy and Climate Change Secretary Edward Davey said:
“This package will deliver record levels of investment in green energy by 2020. Our reforms are succeeding in attracting investors from around the world so Britain can replace our ageing power station and keep the lights on.
“Investors are queuing up to express their interest in these contracts. This shows that we are providing the certainty they need, our reforms are working and we are delivering ahead of schedule and to plan.
“With sixteen new major renewable projects progressing in our “go early” stage we are delivering ahead of schedule and are able to begin the move to the worlds first low carbon electricity market faster than expected.”
The strike prices and contracts give energy generators a sound, sustainable and long-term basis to invest in renewable energy.
They reinforce the UK’s position as one of the world’s leading renewables markets, and the number one place for business to invest in offshore wind generation.
This will support the growth of the offshore wind industry, with modelling showing that deployment of 10GW by 2020 is achievable, in line with the previously stated range of 8-16GW. This is not a target and actual deployment will depend on technology costs
Given the approach set out in the recent European Commission guidance, it is expected that the new state aid guidelines will require the UK to move to competition for more established technologies. The Government will confirm its approach and details of how this will operate through the Delivery Plan and engagement with stakeholders early in 2014.
The contracts will be delivered from within the Levy Control Framework, and is consistent with the plans announced this week reducing the average household bill by £50 a year by early 2014.
Notes for editors
Table 1 - Strike Prices
|Strike Prices £/MWh (2012 prices)||Strike Prices £/MWh (2012 prices)||Strike Prices £/MWh (2012 prices)||Strike Prices £/MWh (2012 prices)||Strike Prices £/MWh (2012 prices)|
|Advanced Conversion Technologies (with or without CHP)||155||155||150||140||140|
|Anaerobic Digestion (with or without CHP)||150||150||150||140||140|
|Dedicated Biomass (with CHP)||125||125||125||125||125|
|Energy from Waste (with CHP)||80||80||80||80||80|
|Geothermal (with or without CHP)||145||145||145||140||140|
|Large Solar Photo-Voltaic||120||120||115||110||100|
|Scottish Islands Onshore||——||——||——||115||115|
The strike prices in Table 1 show the strike price for projects commissioning in the year stated in the column. These prices are in all cases maximum strike prices. In the case that constrained allocation applies earlier, the actual strike price will be the outcome of the constrained allocation process if that is a lower value. While strike prices have been set out for 14/15 in order to ensure comparability, the EMR consultation on proposals for implementation discussed a start date for CfD payments of April 2015. Tidal range projects, which include both tidal lagoon and tidal barrage technologies, do not have a published strike price. Instead, given the lack of cost data available DECC will consider how best to price CfDs and the appropriate length of contracts for these projects on a case by case basis. The strike prices for Tidal Stream and Wave are intended for the first 30MW capacity of any project.
Further information is provided in the document Investing in renewable technologies – CfD contract terms and strike prices
Final Investment Decision (FID) Enabling for Renewables process - Sixteen projects have met the minimum threshold evaluation criteria for FID Enabling for Renewables and will be invited to make binding applications. A further process will now establish which of these projects will be offered investment contracts (an early form of Contracts for Difference (CfDs)), where generators receive a fixed strike price for the electricity they produce. CfDs are vital to give investors the confidence they need to pay the up-front costs of major new infrastructure projects and also help stabilise prices for consumers. A total of 26 projects applied to Phase 2 of the FID Enabling for Renewables process where they were assessed against criteria to make sure they were technically and financially viable, and would contribute to wider industry development. DECC will commence the final selection process later this month, and will assess final applications against the available budget in Spring 2014. Successful projects will then sign their contracts with the Secretary of State. Read more: https://www.gov.uk/government/publications/increasing-certainty-for-investors-in-renewable-electricity-final-investment-decision-enabling-for-renewables. The full process and indicative timetable for FID Enabling for Renewables has been published today in “Final Investment Decision Enabling for Renewables: Update 3: Contract Award Process”.
Table 2 provides a summary, by technology, of the number and capacity of Phase 2 applications and Qualifying Projects.
Table 2: Number and capacity of phase 2 applications and qualifying projects
|Technology||Number of Phase 2 applications||Nameplate capacity (GW)||Number of qualifying projects||Nameplate capacity (GW)|
|Dedicated biomass with combined heat and power||4||0.5||1||0.3|
*This reflects the withdrawal of one application from Phase 2. Note: GW figures are taken directly from Phase 2 applications.
Table: FID enabling for renewables qualifying projects
|Dedicated biomass with CHP:|
|MGT Power Ltd||Teesside Renewable Energy|
|Drax Power Ltd||Drax 2nd conversion unit (Unit #3)|
|Drax Power Ltd||Drax 3rd conversion unit (Unit #1)|
|Eggborough Power Ltd||Eggborough 2nd Unit|
|Eggborough Power Ltd||Eggborough 3rd Unit|
|Eggborough Power Ltd||Eggborough 1st Unit|
|Lynemouth Power Ltd||Lynemouth Power Station|
|Beatrice Offshore Windfarm Ltd||Beatrice Offshore Wind Farm|
|Dong Energy Wind Power A/S||Burbo Bank Offshore Wind Farm|
|Dong Energy Wind Power A/S||Hornsea Offshore Wind Farm|
|Dong Energy Wind Power A/S||Walney Extension Offshore Wind Farm|
|Dudgeon Offshore Wind Ltd||Dudgeon Offshore Wind Farm|
|Inch Cape Offshore Limited||Inch Cape Offshore Wind Farm|
|UK Mainstream Renewable Power Ltd||Neart na Gaoithe Offshore Wind Farm|
|Beinn Mhor Power Limited||Beinn Mhor Wind Farm|
|Ecotricity Group Ltd||Heckington Fen|
At quarter two this year, 15.5% of our electricity was generated from renewables. As a result of this package we expect more than 30% of electricity to come from renewables by 2020.
It is estimated that there could be up to 200,000 jobs in renewable electricity by 2020. This is based on the Renewable Energy Association’s Report: Made in Britain, 2012 . The REA estimate that delivering the 15% renewables target could support up to 400,000 jobs across the renewables sector (heat, electricity, transport) in 2020. Around half of the total renewable energy is likely to come from the electricity sector.
Published: 4 December 2013