UK CfD support set at £205m

RWE's reorganisation won't help much if it keeps dragging its feet on renewables

Offshore wind is in the less-established technologies category

The UK government will provide £205m ($349m) annually from 2016/17 for contracts-for-difference (CfD) support to renewables under the draft budget for its first allocation round – a budget swiftly questioned by renewables industry bodies.

UK renewables projects will compete for “pots” of support within two new bands of clean-energy technologies – “established” and “less established”– in the debut allocation round for the new mechanism, which starts in October.

The established technologies category includes onshore wind, PV, energy from waste with CHP, hydropower between 5MW and 50MW, and landfill and sewage gas.

Less-established technologies include offshore wind, wave and tidal, advanced conversion, anaerobic digestion, dedicated biomass with CHP, and geothermal.

Under the draft budget the established group will fight it out for an annual £50m pot from a project delivery year of 2015/16 through to 2020/21.

An £155m annual pot for less-established technologies kicks in from 2016/17 onwards.

The scale of the draft first allocation was immediately questioned by UK industry bodies.

RenewableUK, which focuses on wind and marine renewables, said the allocation risks being "over-cautious", while the lack of any visibility for future rounds could harm confidence in the offshore wind sector in partiuclar.

Director of policy Gordon Edge said: "Although we appreciate that it’s necessary to hold back budget for future years in order to allow potentially cheaper projects to come forward later, this initial release of the draft budget risks being insufficient to drive industrialisation, competition and cost reduction."

The UK's Solar Trade Association (STA) was dismayed at the £50m pot for PV and the other technologies deemed established by the government.

The STA said: “The message the government is sending out today is clear. It is backing nuclear and other more expensive renewables over value for money solar.”

The STA added: “This is an absurd decision that will ultimately hit energy bill payers across Britain. Solar is already cheaper than offshore wind.

"It will soon be cheaper than onshore wind, and it stands a realistic chance of being cheaper than gas by the end of the decade."

Onshore wind for the Scottish Islands is included in the less-established category – and DECC said CfDs for those projects remain subject to EU State Aid approval.

The European Commission yesterday cleared the rest of the CfD system for renewables.

The UK Department for Energy and Climate Change (DECC) stressed that the draft budget could be altered before it is finally signed-off in September.

The allocation is in addition to the support already allocated under the early CfD process, which backed eight projects including five offshore wind farms.

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