Energy Security Secretary Grant Shapps has announced a £22m funding boost for the government’s Contracts for Difference renewables scheme.
Today, the Energy Security Secretary Grant Shapps has announced a £22m increase in government backing for the flagship Contracts for Difference scheme. This funding boost will take the total budget to £227m.
Launched in 2014, the scheme is the government’s central system for supporting low-carbon electricity generation. It has already led to an increase in the proportion of the UK’s energy coming from renewables.
Renewables make up a significant proportion of the UK’s electricity generation
In 2022, renewables fuelled around 42% of the UK’s energy generation – up from 7% in 2010. This is significant compared to the US’ 21% and Japan’s 23%.
In the first quarter of 2023, renewable energy generated a record 48% of the UK’s electricity.
This will be boosted by the increased funding and the introduction of annual auctions this year. The funding is set to strengthen the UK’s energy security and help meet crucial net zero targets.
Energy Security Secretary Grant Shapps said: “Putin’s barbaric action against Ukraine made clear our need to do whatever it takes to bolster our energy security.
“Today’s funding through our flagship Contracts for Difference scheme – the lifeblood of our renewables industry for nearly a decade – will help grow our economy by making Britain the first choice for investors in renewable energy projects and secure skilled jobs for future generations.
“This will be the case for established technologies like solar, and new innovations like floating offshore wind and, alongside our backing for oil and gas, carbon capture and our revival in nuclear, will ensure we can help power more of Britain from Britain for decades to come.”
The funding is set to enhance the UK’s renewable energy sector
The new funding for the current round will mean:
- An increased budget for established technologies like solar and wind – from £170m to £190m;
- An increase in the budget for emerging technologies like floating offshore wind – from £35m to £37m; and
- Maintaining a £10m ring-fenced budget for tidal stream projects.
It is expected that the funding boost will send a powerful signal to the industry, increasing developer confidence in the UK’s renewables sector.
The investment into the Contracts for Difference scheme will help to replace expensive imported fossil fuels with cheaper, cleaner, domestic sources of energy – securing the UK’s energy future.
About the Contracts for Difference scheme
The Contracts for Difference scheme has helped accelerate plans to diversify, decarbonise, and domesticate the UK’s energy supplies. The last round has secured approximately 11GW of low carbon capacity – enough to generate sufficient electricity to power 12 million UK homes.
The scheme supports the deployment of renewable power rights across Britain. So far, the scheme has awarded contracts to 52 projects in Scotland – representing 30% of all Contracts for Difference projects.
In Wales, the scheme has awarded contracts to nine projects, totalling approximately 260MW of capacity.
Minister of State for Energy Security and Net Zero Graham Stuart stated: “Our successful, world-leading scheme has accelerated the roll-out of renewable, homegrown energy.
“Today’s increase will improve energy security and maximise the potential of the scheme. This will result in investment, a stronger renewables sector, and growth to our economy.”
Neil McDermott, CEO of the Low Carbon Contracts Company, concluded: “The £22m boost to the Contracts for Difference (CfD) Allocation Round 5 reaffirms the government’s commitment towards transforming Britain into a global leader in renewable energy.
“Contracts for Difference plays a crucial role in enhancing energy security, driving economic prosperity, and propelling us towards a more sustainable future. LCCC currently manages a portfolio of 98 CfDs, and is excited to deliver AR5, furthering our vision to accelerate the delivery of net zero.”
