Energy Security Secretary Grant Shapps reveals a £22 million increase for a flagship program.

Grant Shapps stated that a multimillion-pound investment in greener, more secure energy would make Britain the “first choice” for investors.

Today, the Energy Security Secretary announced an increase of £22 million in government support for renewable energy through the flagship “Contracts for Difference” initiative, bringing the total budget for this auction to £227 million.

The scheme, introduced in 2014, is the government‘s primary mechanism for supporting low-carbon electricity generation, and it has already resulted in a rise in the percentage of renewable energy in the UK.

In 2022, renewables fueled approximately 42% of the UK’s electricity generation, up from 7% in 2010, compared to approximately 21% in the United States and 23% in Japan.

In the first part of 2023, renewables accounted for a record 48% of our electricity generation, representing significant progress towards our goals of decarbonising the power sector by 2035 and reaching net zero by 2050.

The increased funding, coupled with the introduction of annual auctions this year, will increase investments in Britain’s world-leading renewable industry, bolstering the country’s energy security, fostering the growth of its green industries, and reducing its exposure to volatile global petrol prices.

Secretary of energy security Grant Shapps said: “Putin’s barbaric action against Ukraine made it abundantly apparent that we must do whatever is necessary to strengthen our energy security.” “Today’s funding through our flagship Contracts for Difference scheme – the lifeblood of our renewables industry for nearly a decade – will contribute to the growth of our economy by attracting investors in renewable energy projects and securing skilled employment for future generations.”

“This will be the case for established technologies such as solar, as well as innovations such as floating offshore wind, and, along with our support for oil and gas, carbon capture, and revitalisation of the nuclear industry, we will be able to help power a greater portion of Britain from British sources for decades to come.”

New funding announced today for the current round (AR5) will result in:

  • A £170 million to £190 million increase in funding for established technologies such as solar and offshore wind
  • An increase from £35 million to £37 million in funding for emergent technologies such as floating offshore wind
  • Keeping the £10 million earmarked for tidal stream initiatives

This funding increase is anticipated to send a strong signal to the industry, boosting developer confidence in the sector each year and enhancing the UK’s reputation as one of the most attractive places to invest and grow the economy, with nearly 25,000 jobs directly supported by renewable electricity sectors in 2021.

Today’s increase coincides with Deputy Prime Minister Oliver Dowden’s visit to Able Seaton Port to announce the installation of the first of more than two hundred 260-meter-tall wind turbines at Dogger Bank, the world’s largest offshore wind farm. 

A specialised floating platform taller than the Eiffel Tower has been developed to deploy the wind turbines on the ocean floor.

When completed, the 277 turbines, comprised of Welsh-manufactured and Corby- and Hartlepool-processed British steel, will power the equivalent of up to 6 million residences annually. Dogger Bank is being constructed in three phases by renewable energy developers SSE Renewables, Equinor, and Vargronn.

The National Risk Register, which details the most significant threats to the UK, was published today as part of government efforts to better prepare the public and businesses for the threats confronting the nation, including those to energy security.

Oliver Dowden, deputy premier, stated: “Today, we released the most recent version of the National Risk Register, which details the numerous challenges we face to keep Britain secure in an uncertain world, such as the possibility of disruptions to global energy supplies.”

“Supporting British renewables will mitigate this danger and undermine Putin’s energy extortion. For this reason, I am with SSE in Hartlepool today as we install the first wind turbine at the new Dogger Bank offshore wind farm, generating affordable, clean energy to power millions of British households.”

“This latest financial support will assist in replacing costly imported fossil fuels with cheaper, greener domestic energy sources. Building a more secure energy future will result in billions of pounds of private investment and millions of employment across the UK.”

The Contracts for Difference scheme has already accelerated plans to diversify, decarbonise, and domesticise the UK’s energy supplies, with the most recent round (AR4) securing approximately 11GW of low carbon capacity – enough to generate enough electricity to power 12 million British homes through nearly 100 clean technology projects.

The initiative supports the deployment of renewable energy throughout the entirety of the UK, having so far awarded contracts to 52 projects in Scotland, representing approximately 30% of all CfD projects. 

The scheme has awarded contracts for nine initiatives totalling approximately 260MW in Wales.

Graham Stuart, Minister for Energy Security and Net Zero, stated: “Our innovative, world-leading programme has expedited the spread of renewable, domestic energy.” “This increase will enhance energy security and maximise the scheme’s potential. This will result in investment, a strengthened renewables industry, and economic expansion.”

The CEO of the Low Carbon Contracts Company, Neil McDermott, stated: “The £22 million increase to Contracts for Difference (CfD) Allocation Round 5 reaffirms the government’s dedication to transforming the UK into a global leader in renewable energy. Contracts for Difference are crucial in bolstering energy security, fostering economic growth, and propelling us towards a more sustainable future. LCCC currently administers 98 CfDs and is thrilled to deliver AR5, furthering our vision to expedite the delivery of Net Zero.”

Claire Dykta, National Grid Electricity System Operator’s Head of Markets, stated: “In light of our assessment of eligible projects, we applaud the Secretary of State’s decision to revise the budget for Allocation Round 5.”