UK Contracts for Difference

On 29th May, the UK launched its third Contracts for Difference (CfD) round under which the Department for Business, Energy and Industrial Strategy (BEIS) will offer £65 million to support up to 6GW of new renewable energy capacity, enough to power around 350,000 homes each year.

This third round of funding is open to anaerobic digestion projects greater than 5 MW, dedicated biomass CHP projects and advanced conversion technology projects, as well as other renewable technologies such as wind, geothermal and tidal.

Registration closes on 18th June and winning bidders will be due to start contributing power to the grid from 2023/2024.

Around 10 GW of renewable power projects have been awarded CfD contracts since 2015, with more than £490 million having been spent to date. The UK Government is aiming for 70% of electricity to come from low carbon sources by 2030.

The first round of CfD contracts was awarded in 2015. There were five in the waste/biomass sectors, totalling 157 MW. None are as yet operational. The most advanced is the Energy Works facility at Hull, although this has been plagued with construction difficulties and delays; the main contractor was replaced in March 2019 and it is currently uncertain when the plant will open. The other four projects are at even earlier stages of development.

The second round of contracts, issued in 2017, appears to have fared even worse. Eight projects in the waste and biomass sectors were selected, but most appear to have fallen away due to planning or funding difficulties. It remains to be seen whether any are operational on schedule in 2021/22.