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Offshore Wind Journal

Commission recommends changes to UK auction regime

Tue 10 Jul 2018 by David Foxwell

Commission recommends changes to UK auction regime
Sir John Armitt: “government should set out a pipeline of pot 1 CfD auctions and move newly cost competitive technology – such as offshore wind – to pot 1”

The National Infrastructure Commission in the UK has recommended changes to the Contracts for Difference regime, including moving offshore wind into pot 1 and setting out a clear pipeline of auctions.

Published on 10 July, the National Infrastructure Commission’s National Infrastructure Assessment – the first ever document of its type produced in the UK – recommends that government should set out a pipeline of pot 1 contracts for difference (CfD) auctions, to deliver at least 50% renewable generation by 2030, as part of the transition to a highly renewable generation mix.

It also recommended the government should move technologies that have recently become cost competitive – such as offshore wind – to pot 1 following the next CfD auction, due to take place in early 2019.

“Pot 1 should be used for the overwhelming majority of the increase in renewable capacity required,” said the NIC.

The assessment also recommended the government should publish indicative auction dates and budgets for the next decade by 2020 and, over time, take whole system costs into account in CfD auctions, as far as possible.

It recommended the government consider whether there is a case for a small-scale, pot 2 auction in the 2020s, if there are technologies which are serious contenders for future pot 1 auctions and that it should not agree support for more than one nuclear power station beyond Hinkley Point C, before 2025.

The NIC further recommended the government establishes the safety case for using hydrogen (which can be produced using renewable energy) as a replacement for natural gas, followed by trialling hydrogen at community scale by 2021 and that subject to the success of trials, launching a trial to supply hydrogen to at least 10,000 homes by 2023, including hydrogen production with carbon capture and storage.

NIC chairman Sir John Armitt said it has long been assumed that a switch to greener sources for the country’s energy needs would mean a hit on people’s pockets – but analysis for the commission shows this would not necessarily be the case.

But he warned this will only be possible if the right decisions are taken now by government. These include continuing to invest in low cost renewable technologies, such as wind and solar, so that these provide at least half the country’s generating capacity by 2030.

Sir John said “Where the UK’s energy comes from will need to change radically over the coming decades if the UK is to meet its legally-binding climate change targets. If we act now we have a golden opportunity to make our country greener and protect the money in the pockets of consumers long into the future.

“Ministers can seize this chance by investing in renewables and other low-carbon technologies, so they become the main players in our energy system – something that was considered a pipedream as little as a decade ago. But they need to act now to realise the full potential of what can be achieved.”

 

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