Ahead of the upcoming clean power auction, RenewableUK, our members and other supporters of renewable energy are urging the Government to increase ambition and build #MoreRenewablesToday.
While the renewable energy sector welcomed the new ambitions and policies set out in the Energy Security Strategy, many of those plans will benefit consumers in the longer term.
But to cut bills in the short-term, the Government has a huge decision to make on how many ‘shovel ready’ wind, solar and tidal energy projects it will give the green light to in just a few weeks’ time.
We're calling on the Government to grasp the opportunity to maximise investment in wind, solar and tidal energy through the next power auction. By increasing ambitions for the 4th Contracts for Difference auction, we can cut bills faster, create thousands of jobs and unlock tens of billions of pounds of investment across the UK. Since the Government set out their initial ambitions for this clean power auction before Christmas, there have been three big changes:
More renewable projects have received planning permission and are now ‘shovel-ready’
Consumer bills have risen by an average £700 due to the soaring cost of gas, and could yet rise higher still
The British Energy Security Strategy set a target of 95% low carbon power and quadrupling offshore wind by 2030
Switching from reliance on expensive gas to home-grown clean energy means we have to build as much new renewable energy capacity as quickly as possible – and the good news for consumers is that this will cut bills faster than any other options for new power.
The opportunity in the hands of Government
Across the UK, there are hundreds of offshore wind, onshore wind, solar and tidal energy sites – which all already have planning permission and are ready to build.
Given the low cost of renewables and the soaring cost of gas, these projects are set to lower energy bills. If we had a fraction of these projects generating electricity for us right now, we would all have been £100 better off this winter.
Crucially, solar and onshore wind sites can be built faster than any other form of new electricity generation. Shovel-ready onshore wind and solar farms could be providing the UK with clean, low cost, homegrown power as early as next year.
Offshore wind farms offer clean power at a different scale to other renewables. New offshore wind projects in the UK are typically at a scale of 1gigawatt or more – that is, enough to power over a million homes a year. While not as quick to build as onshore wind or solar, offshore wind projects that win contracts this year could be generating in 2025 – compared to a construction time of 8-10 years for a nuclear power station.
What’s more, the growth of the renewable energy sector is supporting thousands of jobs across the UK, with offshore wind set to employ 69,000 people by 2026 and onshore wind already Scotland’s biggest low carbon employer.
In just a few weeks’ time, the Government will hold the latest round of auctions for clean power contracts which will decide how many new renewable energy projects will go ahead in the next few years. We’re calling for the Government to maximise the private investment in wind, solar and tidal energy projects they could unlock through this process.
Where are these renewable energy projects and how many are there?
We have over 8GW of offshore wind, 3.9GW of onshore wind and 5GW of solar sites which are ‘shovel ready’ (i.e. have planning approval). Although solar sites are across the UK, 95% of potential onshore wind sites are in Scotland and Wales. There are nine offshore wind projects, including floating offshore wind farms, spread across the east coast of England and Scotland.
Supporters of #MoreRenewablesToday
If renewable energy is so cheap, why do they need a Government power contract? What is the benefit for consumers?
Simply, Government contracts benefit bill payers more because they reduce risk for investors and, therefore, the costs of a wind farm and the power it produces.
Government’s Contracts for Difference scheme guarantees an agreed price over 15 years which de-risks the investment and lowers the lower cost of capital that lenders will charge project developers. In short – the system lowers the costs of renewable energy projects, further lowering energy costs for bill payers.
By securing low-cost, long-term clean power supplies for consumers, the CfD insulates households from volatile costs and price shocks. For example, if the 4th allocation round were to secure an additional 2.2GW above the Government’s current ambitions, this would cut consumers’ exposure to gas by a further £1.5bn a year.
Furthermore, with commodity prices and supply chain costs rising across Europe – as they are in every part of the economy – if we hold back investment to a later date, we risk paying more than if we were to decide to maximise investment in new capacity now.