The UK is aiming to reform the CfD scheme. Credit: Thomas G från/Pixabay.

The UK government has announced reforms to the contracts for difference (CfD) scheme to drive further investment into renewable energy.

The government previously awarded more than 26GW in low-carbon electricity generation projects such as offshore wind and solar.

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The per unit price for offshore wind in megawatt-hours has fallen by almost 70% between the first auction, held in 2015, and the most recent one in 2022.

Up to now, CfDs have been awarded on bid prices submitted by developers with the aim of increasing deployment while ensuring value to consumers.

The government now aims to seek evidence about a project’s contribution to the overall health of the renewable energy industry.

Such ‘non-price factors’ could include bringing sustainability into the supply chain, addressing skills gaps and innovation, and bringing system and grid flexibility and operability.

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These considerations are expected to bring more investment into the sector, boosting energy security in the country.

Named ‘Call for Evidence’, the reforms will help in the CfD scheme’s evolution, as long-term market arrangements are being considered through the review of electricity market arrangements.

The growing renewable energy industry has also created 68,000 jobs since late 2020.

The government also stated that if the reforms are deemed more effective, it will begin a consultation for more detailed proposals.

Minister of State for Energy Security and Net Zero Graham Stuart stated: “Our flagship contracts for difference scheme has been hugely successful in supporting British low-carbon electricity generation, while also driving down costs for the benefit of consumers.  

“But we want to go further to ensure we maximise the scheme’s potential to improve energy security and ensure renewable energy developers can make the necessary investment in supply chains and innovation, which will ultimately make for a stronger sector and help our economy to grow.”