This week brought confirmation that onshore wind and solar will be able to participate in the next round of Contracts for Difference (CfD) auctions, providing the potential for new projects to secure a stable, long-term price for power whilst ensuring best value for the consumer. The total pot available for all technologies will be 12GW, a helpful volume and getting closer to the scale of new capacity that needs to be built. Clear policy direction is what investors and developers need to create bankable projects which create jobs and help the UK move towards net zero. It is this long-term certainty, even if the strike prices are relatively low, that enables these capital intensive investments to take place.
CfD auctions are likely to favour large-scale projects, however, which reflects a trend. Last week’s Ten Point Plan was confirmation that the government is (finally) taking its net zero commitments seriously. Cleaning up transport and how we heat our homes will be a major step forward in meeting UK net zero goals and we warmly welcome ambitious plans for offshore wind. But what the whole plan is in danger of missing is an understanding of the power and value of decentralised energy, allowing communities and businesses to build their own on-site wind and solar capacity, serving local needs. Facilitating international infrastructure and utility companies at the expense of locally rooted, sustainable green energy generation will only get us so far. One third of the UK’s current portfolio of wind, solar and hydro projects is smaller scale – below 20MW. 10% is below 5MW[1], projects which can be funded and constructed by a community or business. These lower capacity projects are not nice to haves, but a material part of our national infrastructure.
The CfD announcement also includes plans for an update to the community benefits and engagement advice for onshore wind farms. We would like this to mean the government is starting to recognise ownership as part of the package. Involving communities, businesses, and public sector organisations in generating their own power is vital reaching net zero. If we are to truly transform, we need to ‘take people with us’ as we journey towards a clean energy future, and for that to happen they need to see and feel the benefits; a more efficient, blended system, matching demand with supply locally where possible.
Climate experts have done the maths and revealed that the plan, even if we order everything on the ten point menu, still leaves us short. The new CfD auctions are more ambitious, but in the face of a climate emergency potentially still not enough. Smaller scale onshore wind and solar could help close that gap, and as a proven, reliable technology they are ready to deploy almost instantly. New research by RenewableUK shows that with the right policies in place, the total capacity of onshore wind could grow to 30GW by 2035, with the potential to power more than 19 million homes per year. Deployment at that level would support over 30,000 jobs, secure £46bn in new investment, and could save a typical household £50 a year on electricity bills.
In the Ten Point Plan booklet, Business Secretary and COP26 President Alok Sharma said: “over the next year we will work with industry to devise further sectoral plans and meet our carbon budgets and target of net zero by 2050”. We hope recent announcements truly are ‘only the start’ and when we get the detail we still desperately need, provision will be made to include smaller scale onshore wind, solar and hydro for those businesses, communities and local authorities trying to make Net Zero work for them locally.
On 1 December, we will be joining leading investors at the Green Recovery session ‘Unlocking investment to build back greener’ to discuss how we unlock investment into the zero carbon infrastructure of the future. What are the measures required to give investors’ confidence, de-risk investments and drive down technology and deployment costs?
[1] National renewable energy planning database, March 2020. https://www.gov.uk/government/publications/renewable-energy-planning-database-monthly-extract
Written by Matthew Clayton, managing director, Thrive Renewables
