Department of Energy and Climate Change Secretary, Ed Davey, has revealed that renewable electricity projects will compete for £300 million in support this Autumn.
The figure, which was announced last week, is an additional £95 million to the indicative budget proposed in July. The funding for Contracts for Difference provides long-term confidence for investors and acts a cornerstone of the Government’s reforms to the electricity markets. The funding is designed to strengthen investment in secure and renewable electricity source.
Low-carbon electricity projects will compete at auction for the contracts, which will deliver new capacity much more cheaply than through the previous arrangements, resulting in lower bills. It is estimated that the reforms to the electricity markets will mean that average annual household electricity bills are around £41 lower over the period 2014 to 2030 than decarbonising without these changes.
The increased budget will be split between different types of technologies: established technologies, such as onshore wind and solar, will compete for up to £65 million in support, reflecting the fact that these technologies are already more competitive.
Less established technologies, such as offshore wind and marine, will share in up to £235 million, demonstrating the Government’s commitment to helping these technologies become as competitive as the more established low carbon generation sources.
The projected spend of the budget remains within the Levy Control Framework, which caps the costs to consumers of government energy policies.
Mr Davey said: “We are transforming the UK’s energy sector, dealing with a legacy of underinvestment to build a new generation of clean, secure power supplies that reduce our reliance on volatile foreign markets. Average annual investment in renewables has doubled since 2010 – with a record breaking £8 billion worth in 2013. By making projects compete for support, we’re making sure that consumers get the best possible deal as well as a secure and clean power sector.”
The budgets for next year’s auction will be confirmed in 2015, but £50 million more has already been indicated for established technologies, with significant further funding potentially available to fund further projects, including renewables and Carbon Capture and Storage, by 2021.
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This article has been adapted from an article published by Installer Online.