Government commits more than half a billion pounds to next CfD round

By Grimsby Telegraph | Posted: 12 Oct 2017

THE Government has announced the period when the next energy subsidy round will fall, as it unveiled its Clean Growth Strategy, highlighting offshore wind as a key solution.

It will take place in Spring 2019, and follows last month's groundbreaking Contracts for Difference auction, which saw the price of offshore wind halved since 2015.

The Government's guarantee of a set level of support for green technology is the final element that gives the companies behind the developments the confidence to invest, and comes after all consents are in place. 

Dong Energy immediately gave financial sign off to the price-smashing Hornsea Project Two when the CfD results were announced, building further on Grimsby's 1GW installed capacity, with more than 3GW now operated or in a confirmed construction pipeline. 

Energy Minister Richard Harrington said that up to £557 million will be made available as part of the Government’s Clean Growth Strategy, to drive economic growth and clean up the energy system.

Since 1990 the UK’s emissions are down by more than a third while the economy has grown by two-thirds. Low carbon generation provided more than half (52 per cent) of the UK's electricity this summer, according to National Grid, while PwC analysis shows the UK decarbonising faster than any other G20 nation.

Mr Harrington said: "The government’s Clean Growth Strategy will set out how the whole of the UK can benefit from the global move to a low carbon economy.

"We’ve shown beyond doubt that renewable energy projects are an effective way to cut our emissions, while creating thousands of good jobs and attracting billions of pounds worth of investment.

"The Clean Growth Strategy will look across the whole of the economy and the country. It includes ambitious proposals on housing, business, transport and the environment, as well as the power sector. It will also show how actions taken to tackle emissions have helped to reduce energy bills for households."

Dong Energy's Hornsea Project Three may well be auction-ready come early 2019, with Project Two wowing industry and beyond when it came in at £57.50. There are also huge projects north of it, at Dogger Bank, also in development.

Launching the Clean Energy Strategy at Olympic Park, Minister for Climate Change and Industry, Claire Perry, said: "The Government is today publishing the Clean Growth Strategy - an ambitious strategy to cut emissions while keeping costs down for consumers, creating good jobs and growing the economy. This is an important component of our modern Industrial Strategy. 

"Clean growth can make a real difference to people’s lives, from reducing energy bills and improving air quality, to supporting new technologies and boosting earning power in high-quality jobs.

"We start from a position of strength. We have already made significant progress towards our legally binding 2050 target to reduce emissions by at least 80 per cent against 1990 levels. We exceeded the target emissions reductions of our first carbon budget (2008 to 2012) by one per cent of the budget level and we project that we will outperform against our second and third budgets covering the years 2013 to 2022 by almost five per cent and four per cent respectively.

"The UK is a world leader in cutting emissions while growing the economy. Provisional statistics indicate that UK emissions in 2016 were 42 per cent lower than in 1990 and 6 per cent below those in 2015. At the same time, the UK’s GDP has increased by 67 per cent since 1990 showing that a strong, growing economy can go hand in hand with reduced emissions. On a per person basis, this means that we have reduced emissions faster than any other G7 nation and led the G7 group in growth in national income over the period.

"The global transition to a low carbon economy offers huge growth opportunities which the UK is well placed to take advantage of as a core element of our Industrial Strategy. Our low carbon sector already employs over 230,000 people directly and another 200,000 through supply chains. Analysis for the Committee on Climate Change estimated that the low carbon economy has the potential to grow 11 per cent per year between 2015 and 2030 - four times faster than the rest of the economy.

"While we have performed strongly to date, the task ahead is significant. The Clean Growth Strategy sets out policies and proposals across the whole of the economy and the country including business, housing, transport, power, the natural environment and the public sector.

"Low carbon innovation is at the heart of our approach, with over £2.5 billion of government investment from 2015 to 2021. This forms part of the largest increase in public spending on UK science, research and innovation in almost 40 years."

Siemens chief executive Juergen Maier was on stage with Business Secretary Greg Clark and Mrs Perry at the launch, having been a strogn figurehead with the arrival of the blade manufacturing plant in Hull. 

Carbon capture and storage has also re-emerged, and has been mooted around the Humber as part of a network linking large-sale emitters.

Following today's launch, Matthew Wright, Dong Energy UK managing director, said: "The ambition and commitment represented by the Clean Growth Strategy is fantastic news for the renewable energy industry and is very much in line with our own vision to create a wold that runs entirely on green energy. We look forward to working with Government to help realise the aims of this new strategy.

"Offshore wind can be the backbone of the UK’s energy system, providing a substantial source of green energy for consumers, as well as creating high quality jobs across the country in a thriving UK supply chain. By retaining its global leadership position, the UK is also well placed to export products and services overseas. Offshore wind is now competitive with other forms of generation, as seen in the recent CfD auction which saw the lowest ever strike price for offshore wind in the UK, and we remain committed to driving down costs even further.”

Colleague Benj Sykes, who also co-chairs the Offshore Wind Industry Council, said: "OWIC warmly welcomes the Government’s Clean Growth Strategy which will further build on the UK’s world-leading renewable energy sector.

“£557 million for future CfD auctions provides certainty for the industry and the opportunity to build more innovative, low-cost renewable projects.

“Our partnership with the Government is a huge success story, with record low costs for consumers, a growing industrial base and more than 10,000 jobs, many of which are based in coastal communities.

“Offshore wind can be the backbone of the UK’s electricity system and we are now working with the Government to deliver an ambitious and transformational sector deal. This will capitalise on the UK’s global leadership to build a world-leading supply chain for the growing international market and create thousands more skilled, long-term jobs right across the country.”

Focusing onshore, albeit with Immingham Renewable Fuel Terminal on the Humber at the heart of a £750 million supply chain for its biomass, Drax Group chief executive Dorothy Thompson said: “We welcome the Government’s Clean Growth Plan and the opportunities it gives both Drax and the businesses we supply, to play an important part in delivering clean growth.

“We are already seeing decarbonisation in industry - the proportion of businesses choosing to use renewable electricity supplied by Haven Power, part of Drax Group, has more than tripled this year, reducing the carbon emissions from these businesses by 76 per cent compared to five years ago – saving almost 1.5 million tonnes of carbon. We now need to work with these customers to use the information from smart technologies to fuel future decarbonisation and help them to become even cleaner and more sustainable.

“Flexible technologies like Drax’s biomass and gas are vital in supporting the government’s strategy. As today’s plan makes clear, biomass generation is crucial because it’s a reliable, flexible renewable available at scale, able to provide the full range of support services the grid needs to retain stable supplies – whatever the weather. Our biomass, with the rapid response gas power plants we’re developing, will support the system and enable more intermittent renewables to come online, helping us to further decarbonise."

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