The UK Government has decided to hold Contracts for Difference (CfD) auctions every year to expedite the adoption of renewable power and improve its energy security.
The CfD scheme was introduced in 2014 to support low-carbon electricity generation projects. Auctions were previously held every two years.
Go deeper with GlobalData
CfDs are 15-year private law contracts between electricity generators and the state-owned Low Carbon Contracts Company (LCCC) that are awarded through a competitive tender process.
The lowest bid wins each round, which is intended to drive down the cost of energy generation in turn.
According to a government statement, the change will be implemented in March next year, when the next CfD round is due to open.
Business and Energy Secretary Kwasi Kwarteng said: “We are hitting the accelerator on domestic electricity production to boost energy security, attract private investment and create jobs in our industrial heartlands.
“The more clean, cheap and secure power we generate at home, the less exposed we will be to expensive gas prices set by international markets.”
Since its first auction, CfD has supported around 16GW of new low-carbon electricity capacity, including 13GW worth of offshore wind assets.
By holding auctions more often, the government intends to allow more projects to enter the system.
RenewableUK chief executive Dan McGrail said: “Moving to annual CfD auctions is a major step forward that will significantly accelerate the speed of our nation’s transition to net-zero.
“We need to build up to 4GW of new offshore wind capacity every year to stay on track for net-zero, which means quadrupling our current annual rate.
“Similar increases in onshore wind, solar and other clean power sources are vital too, as well as ramping up the roll-out of innovative technologies like floating wind, green hydrogen and marine power.”
Last month, the government agreed to provide funding for the development of floating offshore wind projects in the UK.
