Renewables budget increased
2 Oct 2014
The government today announced it was increasing financial support for renewable energy by £95 million per year.
Energy and Climate Change secretary Ed Davey confirmed funding for the Contract for Difference (CfD) price support scheme would now total £300 million annually, rather than the £205 million announced in July.
Process technologies such as anaerobic digestion (AD) and biomass with combined heat and power (CHP) capability again proved the big winners: projects using these technologies and others that are classed by the government as “less established” will be able to now compete for an annual pot of £235 million.
This represents an increase of £80 million on the figures announced in July, while funding for established technologies such as onshore wind and landfill gas has risen by just £15 million to £65 million per year.
The Department for Energy and Climate Change (DECC) said it was able to increase the CFD budget because the latest estimates of the overall costs of other policies, in particular the existing Renewables Obligation (RO) subsidy, were “lower than expected”.
Under CfD, which is being phased in this month to replace the RO in 2017, generators will receive a top-up payment when the wholesale electricity price is below a pre-agreed “strike price”, and pay money back when the price rises above it.
As revealed by DECC in May, projects using technologies classed as established will have to bid for support via auction, allowing the market to effectively set the strike price. Less established technologies such as AD and biomass with CHP will be competing for guaranteed strike prices (the strike price for new biomass projects with CHP has been set at £125 per MWh).
Despite today’s announcement of an increase in the CfD budget, there were still no funds made available to support the conversion of coal plants to biomass, such as Drax, which the government secured a legal victory against this summer to prevent it receiving support under the CFD .
