Record number of tidal energy projects awarded CfD revenue support

The fifth round of the UK government’s flagship renewable energy auction scheme has secured 3.7 GW of clean energy projects, enough to power the equivalent of 2 million homes.

Launched in 2014, the Contracts for Difference (CfD) scheme ensures projects receive a guaranteed price from the government for the electricity they will generate – giving companies certainty and confidence to invest in the UK. Contracts are awarded through a series of competitive auctions, where the lowest price bids are successful. This year’s auctions were split to ensure that new, less established energy sources do not have to compete for budget from long-established technologies – offering certainty for developers and keeping the UK at the cutting edge of the renewables industry.

In this round, UK Allocation Round 5 (AR5), 95 new projects were awarded funding, including:

• 24 onshore wind farms (1.5 GW) at £52.29/MWh
• 56 solar farms (1.9 GW) at £47/MWh
• 11 tidal stream projects (53 MW) at £198.00/MWh
• 3 geothermal projects (12 MW)

Last year, tidal energy was awarded CfDs for the first time. The record number of tidal energy projects awarded revenue support this year is thanks to the preservation of a £10 million ringfenced budget for tidal stream. The new tidal energy projects will come online from 2027/28 onwards.

Of the eleven tidal energy projects successful in AR5, seven are in Scottish waters. Seven tidal energy developers, including British, Spanish and US companies, secured contracts to develop projects across four locations in the UK, including at the European Marine Energy Centre (EMEC) in Orkney. By supporting a wide range of technologies and sites, the awards will enable the scale-up of multiple device types and maximise the benefits to local communities.

In Scotland, projects led by Orbital Marine Power and SAE Renewables will deliver almost 30 MW, whilst Hydrowing, Verdant Power and MOR Energy will bring nearly 20 MW of capacity to Wales. Spanish developer Magallanes has received contracts for projects in both Scotland and Wales, totalling 4.5 MW.

Andrew Scott, CEO of Orbital Marine Power, said:

“This latest award creates more clarity for us and our supply chain about our immediate ambitions, allowing us to build on our progress to date. Securing these latest CfDs is another key step on a path that ends with clean predictable power being delivered to thousands of UK households and businesses, alongside building factories of the future and creating sustainable, green jobs at a ratio that hasn’t been achieved in the renewable space before. We maintain our commitment to establishing a valuable supply chain within the UK. Maximising the benefits and rewards from this endeavour will take leadership and long-term commitment from the UK Government.”

Energy and Climate Change Minister Graham Stuart said:

“We are delighted that our first annual Contracts for Difference auction has seen a record number of successful projects across solar, onshore wind, tidal power and, for the first time, geo-thermal… Just 7% of our electricity came from renewables in 2010, yet in the first quarter of this year it reached 48% and this first annual auction will allow us to go further in powering more of Britain from Britain.”

Richard Arnold, Policy Director at the UK’s Marine Energy Council, said:

“This is a fantastic day for the industry and proof that with the right support tidal stream energy can play a key role in the UK’s future energy mix. Successive support in renewable auctions could deliver over 100 MW deployed in the UK by 2028. This will see more tidal stream projects in UK waters than the rest of the world combined. By maintaining the ringfence the Government can harness an entirely predictable renewable resource, level up with green jobs in coastal communities, maintain its international leadership and export technology and expertise around the world.”

Remi Gruet, Ocean Energy Europe’s CEO, said:

“Today’s results from the UK reflect the growing confidence in tidal stream and show that dedicated revenue support can instantly generate investable projects. Since last year’s auction, the sector has stepped up, and the number of projects winning contracts shows that tidal energy is becoming increasingly mature. Now the EU must also step up and help create a level playing field for ocean energy so it can realise its full potential as a mainstream renewable energy source.”

Claire Mack, Chief Executive of Scottish Renewables, said:

“While the results for tidal may seem impressive, these projects now need to deliver at what are very low prices. It is critical that government support for the sector is continued and more visibility of that longer term aspiration and support is provided.”

AR5 failed to secure any offshore wind projects, either fixed bottom or floating. Offshore wind developers saw the maximum price they could bid in this year’s auction cut by £2 to £44 per megawatt hour (MWh) despite the global rise in inflation in key commodities like steel and increased financing costs from spiralling interest rates.

Energy and Climate Change Minister Graham Stuart added:

“Offshore wind is central to our ambitions to decarbonise our electricity supply and our ambition to build 50 GW of offshore wind capacity by 2030, including up to 5 GW of floating wind, remains firm. The UK installed 300 new turbines last year and we will work with industry to make sure we retain our global leadership in this vital technology.”

Source: UK Government | Renewable UK | Scottish Renewables | Ocean Energy Europe | Orbital Marine Power

LCCC CfD Video from LCCC on Vimeo.