Published on November 11th, 2016 | by Joshua S Hill0
UK Government Reveals Plans To Phase Out Coal & Fund New Renewable Energy Technologies
November 11th, 2016 by Joshua S Hill
The UK Government announced plans on Wednesday to commit funding to support less developed renewable energy technologies such as offshore wind and marine energy in tandem with proposals to phase out coal-fired electricity generation.
The UK Government’s Department for Business, Energy & Industrial Strategy (BEIS) — which includes what the remnants of what used to be the Department for Energy and Climate Change — reaffirmed on Wednesday its commitment to spend £730 million of annual support on renewable electricity projects over the term of this parliament. Specifically, BEIS outlined details for the next Contracts for Difference auction, in which companies will compete for £290 million worth of renewable energy contracts.
This will be the second Contracts for Difference (CfD) auction — defined as “a private law contract between a low carbon electricity generator and the Low Carbon Contracts Company … introduced as part of the now implemented Electricity Market Reform (EMR) programme.”
“A generator party to a CfD is paid the difference between the ‘strike price’ — a price for electricity reflecting the cost of investing in a particular low carbon technology — and the ‘reference price’ — a measure of the average market price for electricity in the GB market.”
“We’re sending a clear signal that Britain is one of the best places in the world to invest in clean, flexible energy as we continue to upgrade our energy infrastructure,” said Greg Clark, Business and Energy Secretary. “This is a key part of our upcoming Industrial Strategy, which will provide companies with the further support they need to innovate as we build a diverse energy system fit for the 21st century that is reliable while keeping bills down for our families and businesses.”
This round of CfD auctions is expected to produce enough renewable electricity to power around 1 million UK homes, while reducing carbon emissions by approximately 2.5 million tonnes per year from 2021/2022 onward. The strike prices offered are also good news, especially with for offshore wind, which was set 25% lower than it was for the first CfD auction. For offshore wind projects deploying in 2021/22, the strike price is £105/MWh, and for those deploying in 2022/23, £100/MWh, both set at 2012 prices.
“It’s great news that the Government is supporting offshore wind,” said Hugh McNeal, Chief Executive of RenewableUK. “This will enable our world-leading industry to deliver significant investment to the UK. The competitive auction process is continuing to drive down the cost of offshore wind energy at an unprecedented speed.”
“British supply chain companies are already seizing the massive economic opportunities offered by offshore wind – and there’s great potential for further job creation by innovative companies throughout the UK as the industry continues to grow. The Supply Chain Guidance published by Government today will help us to make further strides forward on this.”
The Government also provided strike prices for wave and tidal stream energy: £300/MWh for tidal stream projects deploying in 2021/22, and £295/MWh deploying in 2022/23; and £310/MWh and £300/MWh for wave energy projects deploying in 2021/22 and 2022/23 respectively. Unfortunately, the Government did not provide a minimum level of deployment for which the money would be specifically allocated for such projects.
“We will continue to work with Government to find a way forward for the UK’s innovative wave and tidal energy industries, but we’re disappointed that no minimum level of deployment has been set for them,” added RenewableUK’s Hugh McNeal. “These ground-breaking technologies can replicate the cost reduction we’re seeing in offshore wind and deliver industrial benefits to Britain. We can’t risk falling behind and handing our global lead to other countries.”
In addition to announcing the CfD auction numbers, the Department for Business, Energy & Industrial Strategy also set out proposals for the next steps it intends to take to phase out electricity generation from unabated coal-fired power stations — a plan it hopes to accomplish over the next decade. The BEIS hopes that “This long-term plan will provide confidence to investors that the UK is open to investors in new, cleaner energy capacity as we transition from coal to gas, and build a diverse energy system giving us greater security of supply, which includes record investments in renewable technology and the reliable electricity that new nuclear power investment will provide.”
“The government should be commended for taking an international lead on coal phase-out. With premature deaths from coal emissions standing at over 2,500 a year, it’s time to replace this dirty fuel with renewable technologies that can create more jobs at less cost to our environment. So Ministers should strongly resist any proposals to water down their commitment to full phase-out by 2025.
Low-carbon growth should be at the heart of the forthcoming industrial strategy, sending an unambiguous signal of support for clean energy and infrastructure.”