Warnings on UK funding mechanism

Two leading UK renewables associations have expressed disappointment at the government’s final mechanism for allocating funds under the Contracts for Difference (CfD) support scheme.

The Department of Energy and Climate Change (DECC) has published the so-called allocation framework for the first round of spending within the new scheme.

The Renewable Energy Association (REA) and Solar Trade Association (STA) have been working with officials trying to improve the system for industry, particularly smaller players.

The framework sets out: the general rules for the auction process; the eligibility requirements for bidding for a CfD; and that only two technologies, wave and tidal, will be granted guaranteed support.

The associations claim that the method for allocating money is based purely on the cheapest bids between now and 2019, with no guarantee of support for any particular technology, except wave and tidal.

The REA and STA says this approach makes later schemes more likely to win support than near-term ones, as they will be cheapest.

“The fact is that CfDs are going to disadvantage SMEs [small and medium enterprises] and independent generators. DECC must act to remedy this – and not doing so will put jobs and investment at risk,” says REA chief executive Nina Skorupska.

The STA warns that Britain faces a situation in which there could be little deployment of large-scale solar until 2017.

“Large-scale solar is set to be particularly hard hit because it will not have the security of the Renewables Obligation and the new CfDs are not designed either for SMEs, or to support the steady cost reduction of solar,” says STA head of external affairs Leonie Greene.

“We are working with DECC to make clear how CfDs could be made to work better for smaller solar businesses.

“The consequences for consumers of failing to make CfDs work for SMEs is less competition in power generation going forward, when we urgently need more.

“Stalling solar’s pathway to being subsidy-free also means more expense for consumers. For solar companies this is a strange reward for delivering greater cost reductions than any other renewable technology.”