The UK Authorities will set out the scale of the price range for its subsequent Contracts for Distinction (CfD) public sale in mid-March.
Helena Charlton, who leads the CfD course of on the Division for Power Safety and Web Zero (DESNZ), confirmed the timeline for Allocation Spherical 6 (AR6) at a Westminster occasion this week.
The price range is among the many most essential parameters for the CfD public sale course of as it would assist set up the variety of viable renewable power tasks capable of safe a contract.
Offshore wind builders have been awaiting extra particulars on AR6 after the earlier spherical, AR5 in September, failed to draw any offshore wind builders.
A poorly designed public sale, coupled with inflationary pressures, had been cited – nevertheless a decreased price range additionally performed a job.
The federal government upped its price range for AR5 by £22m in August, to a complete of £227m, however it was nonetheless properly shy of £285m in Spherical 4, drawing criticism.
RWE senior regulatory affairs supervisor James Brabben informed the occasion that readability on the price range is required as quickly as doable.
“The earlier we are able to get a view of the price range for that public sale the higher to assist us events concerned in that public sale work out how profitable it could be.
“It’s fairly clear we’ve acquired a backlog of tasks coming by way of as a result of we missed AR5, and AR6 might actually be the catch-up public sale that retains us on-track to these 2030 ambitions if it’s budgeted in that method.”
Some key parameters of AR6 have been set out already, together with will increase to the strike worth – up however 66% up for fastened wind to £73/ MWh and up 52% for floating offshore wind to £176/ MWh.
It additionally features a revert again to a separate pot for fastened offshore wind, which means it received’t be competing with cheaper tech, as was the case in AR5.
The price range will in the end dictate the scale of those pots, and the variety of tasks which might proceed.
Ms Charlton stated: “We all know that the sector is keenly awaiting the opposite parameters which will probably be introduced in March 2024, and naturally these are essential as a result of they embrace the price range for the spherical. We all know that’s the opposite aspect of the coin to the ASPs (Administrative Strike Costs), so they’re essential.
“The price range is generally decided by the pipeline of eligible pot tasks, and that’s why we intention to go away the price range choice as late as we are able to to permit tasks that are fascinated about collaborating within the spherical time to get their consents and their grid connections confirmed, and for us to get as a lot readability as doable about which tasks are going to participate within the spherical.
Parameters have to steadiness our aims, and so after all on this spherical we positively wish to sign investor confidence, we wish to maximise deployment of renewables – that’s essential for our decarbonisation targets – however we additionally, inside the laws, have to make sure a good worth for customers.”
READ MORE: What are CfDs – and why haven’t offshore wind builders received any?
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