The UK government is looking to update its Contracts for Difference (CfD) scheme, a mechanism for supporting low-carbon electricity generation projects such as offshore wind and solar developers.
Currently, a CfD is awarded based on the bid price submitted by renewable energy generating stations, the aim being to ensure good value to electricity consumers and drive down costs.
The government is now seeking evidence on reviewing applications not just on their ability to deliver low-cost renewable energy deployment, but also based on how much a renewable energy project contributes to the wider health of the renewable energy industry.
These reforms could see applicants considering overall costs alongside other ‘non price factors’ - such as supply chain sustainability, addressing skills gaps, innovation and enabling system and grid flexibility and operability - when submitting their bids, which is intended to help drive investment in the sector.
Graham Stuart, Minister of State for Energy Security and Net Zero, said: “We want to go further to ensure we maximise the [CfD] scheme’s potential to improve energy security and ensure renewable energy developers can make the necessary investment in supply chains and innovation, which will ultimately make for a stronger sector and help our economy to grow.
“This potential reform to the scheme to introduce non-price factors presents a solution to grow the renewable energy supply chain as we accelerate our energy transition plans to power more of Britain from Britain.”
This Call for Evidence is part of the government’s work to continue to evolve the CfD scheme as it considers long-term reform through the Review of Electricity Market Arrangements (REMA).
In January this year, a review of the UK’s net-zero transition planning by former energy minister Chris Skidmore called for the nation’s government to do more to deliver climate action and seize the economic opportunities presented by the transition.
