UK confirms CfD groups plan

The UK government has further outlined its plans to split clean-energy sources that qualify for Contracts for Difference (CfD) support into two distinct groups of so-called “established” and “less established” technologies.

Earlier this year the government confirmed its intention of forcing established renewables technologies to compete for CfDs from later this year based on cost alone, with major implications for onshore wind and solar projects.

The UK Department of Energy and Climate Change (DECC) says established technologies have benefited from significant cost reductions following early research and development.

DECC says technologies to be included within this category are onshore wind and solar projects with over 5MW of capacity; energy from waste projects with combined heat and power (CHP); hydro between 5MW and 50MW; and landfill and sewage gas projects.

It says less-established technologies have a range of characteristics, including a significant potential for cost reduction and the delivery of low-cost renewables generation in the future.

Included in this group are offshore wind, wave and tidal, advanced conversion technologies, anaerobic digestion, dedicated biomass with combined heat and power, and geothermal.

The government says that switching to an auction-based system for established technologies will help to ensure that the most cost-effective projects get built, and reduce the decarbonisation bill for energy consumers.

UK trade bodies said it is hard to ascertain the full implications of the new CfD support regime until more details of the budgeting arrangements are revealed.

The UK originally signalled its intention to initiate the CfD scheme – the lynchpin of the sweeping EMR package – with a first-come-first-served allocation system for renewables projects.

But a number of factors – including the European Commission’s growing impatience with technology-specific support schemes – led Whitehall to ditch the idea of a first-come-first-served system altogether for technologies deemed to be established.