2GW of renewables succeed in first CfD auction

wind investment
Contracts worth £315m have been offered to 27 renewable electricity projects under the government’s first allocation round of Contracts for Difference (CfD).

Over 2GW of green energy capacity successfully bid under the auction system, over half of which is offshore wind (1.1GW). 15 onshore projects and five solar projects have also received contract offers for the power they will generate.

Energy secretary Ed Davey was pleased with the results of the process which DECC estimates has driven down the cost of new projects by £110m per year, compared to had it been done without competition.

“These projects could power 1.4m homes, create thousands of green jobs and give a massive boost to home-grown energy while reducing our reliance on volatile foreign markets,” he said.

“The auction has driven down prices and secured the best possible deal for this new clean, green energy.”

The results have drawn scant praise from the solar sector. The STA described the award of five contracts for solar as disappointing, compared to 15 for onshore wind.

It also predicts a contraction of the solar market in 2015/16 as CfD will enable just 32MW of solar to be supported, as opposed to the 2-3GW being constructed in the current financial year.

According to the STA, the CfD budget is less than 2 percent of the budget allocated to the Renewables Obligation – the financial support mechanism which CfD is replacing for large scale solar.

STA CEO, Paul Barwell, said: “The soon to be cheapest and most popular renewable (solar) has lost out in a complex auction scheme that favours big players and genuinely established technologies. It is essential that changes are made to the next round of auctions in October to ensure that smaller UK solar companies can have the confidence to enter.”