Tuesday, March 3, 2020

United Kingdom: Government Plans Changes to the Renewable Energy Contracts for Difference (CfD) Scheme

UK proposes CfD structure changes, reintroduces onshore wind and solar (Renewables Now)

(Courtesy CIA.gov)
The UK government on Monday unveiled certain changes it plans to make to the Contracts for Difference (CfD) scheme, including reopening the process to established technologies such as onshore wind and solar photovoltaic (PV).

The Department for Business, Energy and Industrial Strategy (BEIS) released a consultation that invites views on the structure of the next allocation round, which is expected to open in 2021. Some of the amendments include: making changes to the competition structure design; extending the delivery deadline until March 31, 2030; classifying floating offshore wind as a separate technology with a distinct administrative strike price; and excluding new coal-to-biomass conversions from future rounds of the scheme.

The current structure design of the scheme involves grouping the competing technologies in two pots, categorising them as “established” and “less-established.” Pot 1 includes: onshore wind and solar PV above 5 MW; energy-from-waste projects with combined heat and power (CHP); hydro above 5 MW but below 50 MW; coal-to-biomass conversions; landfill gas and sewage gas. Pot 2, in turn, is dedicated to offshore wind; remote island wind above 5 MW; wave; tidal stream; advanced conversion technologies (ACT); anaerobic digestion (AD) above 5 MW; as well as dedicated biomass with CHP and geothermal.

One proposal is to keep this structure, only excluding coal-to-biomass conversions from Pot 1 and adding floating offshore wind in Pot 2. However, there is also an alternative option that involves the creation of a third pot to include only offshore wind.

In this case, Pot 1 will include: onshore wind and solar PV above 5 MW; energy from waste with CHP; hydro between 5 MW and 50 MW; landfill gas and sewage gas. Pot 2 will concern less established technologies such as: ACT; AD above 5 MW; dedicated biomass with CHP; floating offshore wind; geothermal; remote island wind above 5 MW; tidal stream; and wave. As already mentioned, the third plot will be dedicated to offshore wind.