The government plans to double the amount of renewable energy it will subsidize next year after agreeing to include onshore wind and solar projects for the first time since 2015.
Energy companies will compete for grant contracts in a competitive auction to be held at the end of 2021, which could support up to 12 GW of renewable energy, or enough clean electricity to charge up to 20 million electric vehicles per year.
The government expects the auction to be nearly double the last 5.8 GW auction held in September 2019, in which offshore wind costs fell by a third to reach record levels, and believes that this could also reduce costs.
The next round will include three separate auctions for different renewable energy technologies to compete for a contract guaranteeing a price for the clean electricity they produce. There will be a ‘pot’ for offshore wind projects and another for less established technologies, including floating offshore wind farms, waste-to-energy plants and tidal stream projects.
The third pot will allow onshore wind and solar farms to compete for a support contract for the first time in six years after the government agreed to drop opposition to the projects earlier this year.
Energy Minister Kwasi Kwarteng said the new auction would build on the Prime Minister’s 10-point climate plan to get the UK to meet its goal of ending its contribution to the increase in global carbon emissions by 2050.
Boris Johnson’s climate plan includes quadrupling UK offshore wind farms to 40 GW over the next decade, as well as plans for green hydrogen and millions of electric vehicles on UK roads, which will require a boom in renewable energies.
Kwarteng credited government support contracts, known as Contracts for Difference (CfD), for making the UK a “world leader in clean energy” and added that the upcoming CfD auction “Would put us firmly on the path to building a new green industrial revolution. “.
Analysts at consulting firm Cornwall Energy said earlier this year that there could be projects totaling 13 GW ready to compete for a contract at the next auction. These include 5.5 GW of onshore wind and solar farms, 6 GW of offshore wind power and the remainder of more nascent renewable energy technologies.
Analysts said this pipeline could change as many renewable energy developers have been able to build their projects without a subsidy and may choose not to be competitive.
In the last auction, the cost of offshore wind fell to a price of around £ 40 per megawatt hour, which is lower than the price of electricity in the wholesale energy market and means that consumers will not need to pay extra to bear the cost of the projects.