Regen welcomes the government’s commitment to fully decarbonise our electricity system by 2035.
In response to this new target, we have written to the Secretary of State for the Department of Business, Energy and Industrial Strategy, Rt Hon Kwasi Kwarteng MP, to urge him to double the capacity of onshore renewables supported in the forthcoming Contracts for Difference (CfD) auction from 5 GW to 10 GW.
The CfD auction due in December is an opportunity to quickly start to deliver on the new target. The low cost of new solar and onshore wind projects means the government could be much more ambitious on the amount of renewables it awards CfDs to at no cost to the bill payer.
The auction is also an opportunity sitting right in front of us to hedge against rising power prices quickly and effectively. CfDs are an excellent energy price hedge: in return for revenue certainty, generators pay back to the public purse when prices are high – directly reducing electricity bills.
Regen’s analysis suggests that there are plenty of projects in the pipeline eligible to compete for CfDs, with 10 GW of onshore wind and solar with planning permission, a further 9 GW in the planning system, and another 20 GW in the wider pipeline of projects that have secured a grid connection.
We also call on the government to commit to holding annual CfD auctions over the coming decade. This would allow developers to build their project portfolios, investors to raise capital, utilities to invest in grid infrastructure and supply chain companies to build the jobs, skills and capabilities needed to efficiently deliver net zero.
Committing to backing 10 GW of onshore renewables would address future power price increases, while at the same time indicating to the global stage ahead of COP26 that the UK is taking the action to deliver on its commitment to achieve net zero and transform the UK economy.
Read the full letter here.