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Posted 2 years ago | 2 minute read

CfD auctions to be held annually in green energy push

The UK government will increase the frequency of auctions through the Contracts for Difference (CfD) scheme, to encourage investment in renewable energy and boost energy security.

CfDs are the government’s primary method of supporting renewable energy, the announcement on 9 February means the frequency of auctions for funding through the CfD scheme will change to every year rather than every 2 years. This will support renewable electricity producers and boost the UK’s renewable energy infrastructure. The change takes effect from March 2023 when the next CfD round opens.

The scheme has been successful in driving down the cost of technologies and playing a key role in leveraging £90B of private investment by 2030. In the previous CfD round, 12 contracts for nearly 6GW of renewable capacity were awarded. Since it was first launched, the scheme has awarded contracts totalling almost 16GW of new renewable electricity capacity.

GridBeyond Asset Development Director Chris Smith said:

“More power will be needed as sectors decarbonise, and moving to renewables is ultimately the only way to mitigate the risk of volatile international fossil fuel prices while enabling net zero. Increasing the frequency of auctions will give new projects and financial institutions the market certainty originally intended when the scheme was designed. Supporting UK job creation and continuing the reduction in the cost of renewables. To a level where the CFD schemes provide the long-term guarantees funders need but generates additional revenue for government rather than a liability.

 “It’s already a challenge to create and maintain an affordable and reliable balance of supply and demand, and increasing levels of intermittent generation will add to this. The government needs to introduce similar effective and low-cost support schemes to enable flexibility markets, support for energy storage, decarbonisation of industrial processes, and the heat and mobility sectors to increase the system flexibility and allow integration of higher shares of solar and wind power.”

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