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CfD round two: The industry reacts

Earlier this morning the Department for Business, Energy and Industrial Strategy published the results of its second Contracts for Difference round.

With offshore wind landing more than 3GW of capacity at strike prices “significantly” cheaper than forecast – at £57.50/MWh, the two projects to be delivered in 2022/23 will be far cheaper than the government’s own estimates – the UK’s renewables industry has heralded the results as a landmark achievement.

Dustin Benton, acting policy director at Green Alliance

“Today’s breathtaking reduction in the cost of offshore wind is great news. But the government’s response is bizarre: it has still spent less than two thirds of its budget on offshore wind, despite the fact that it is now a cheaper energy source than both gas and nuclear. The UK previously invested heavily to bring down the costs, but now that it is cheap we aren’t buying. Rather than restricting our spending, we should take advantage of a bargain and build more clean energy now.”

James Court, head of policy and external affairs at the Renewable Energy Association

“The latest renewables auction show huge price reductions across the board, with offshore wind, energy from waste and biomass clearing at prices from £57.50-£74.75.

"These results show that renewables are now the most cost effective form of any energy generation which can future proof both the UK grid and provide sustainable new jobs in the UK.

"Offshore wind's success shows what can happen with government support, and consider that this auction was for so called 'less established' technologies, with the more mature onshore wind and solar blocked to market. Surely now is the time for the government to commit to a low carbon industrial strategy.”

Sebastian Blake, commercial manager at Open Energi

“The dramatic fall in offshore wind costs announced today is fantastic news for the UK economy and the decarbonisation of our energy system. Hinkley Point C is looking pretty darn expensive, but assuming nuclear and wind continue to be the focus of our decarbonisation efforts, these will drive a much greater requirement for flexibility on the network.

“Storing energy and making demand more responsive are the most low carbon means of achieving this. There is a huge amount of untapped flexibility in the electricity consuming devices all around us. Just by being smarter about how and when we consume electricity we can unlock some 6GW of demand flexibility. New technologies mean we can optimise our demand and deliver this opportunity without impacting how we work and live.”

Alasdair Cameron, renewable energy campaigner at Friends of the Earth

“These spectacular cost reductions in offshore wind, along with the falling price of onshore wind and solar, mean that renewables are now the cheapest new power sources available to the UK.

“As we see the devastating effects of extreme weather around the world, there can be no more excuses for failing to tackle climate change and cleaning up our power supply. 

“Renewable power is clean, popular, reliable and cost-effective – the government must make this the centrepiece of its energy strategy and end its obsession with new nuclear and dirty fossil fuels.”

Nick Molho, executive director at the Aldersgate Group

“The announcement today that the next round of offshore wind projects will receive a strike price of £57.50-74.75/MWh highlights the considerable cost reductions achieved by the offshore wind industry, at the same time as delivering increased UK content.

“Larger and more efficient turbines now mean offshore wind is a mainstream component of the UK’s energy mix and turbine blade manufacturing facilities in Hull and the Isle of Wight and servicing companies around the coast are important examples of how the industry has driven jobs and supply chain growth across the UK.

“The UK is reaping the benefits of competitive auctions and stable government policy in this area. To continue to see costs reduce, a clear pipeline of projects well into the 2020s will be required and the government’s forthcoming clean growth strategy must ensure that the £730 million earmarked for auctions of less established technologies during the last parliament will be committed by 2020 as originally planned.”

Hugh McNeal, chief executive at RenewableUK

“We knew today’s results would be impressive, but these are astounding. Record-breaking cost reductions like the ones achieved by offshore wind are unprecedented for large energy infrastructure. Offshore wind developers have focused relentlessly on innovation, and the sector is investing £17.5 billion into the UK over the next 4 years whilst saving our consumers money.

“Today’s results are further proof that innovation in the offshore wind industry will bring economic growth for the UK on an industrial scale. The UK needs to establish new trading opportunities as we leave the European Union, and the UK’s offshore wind sector is a world leader in a global renewable energy market currently worth $290 billion a year.

“Today’s results mean that both onshore and offshore wind are cheaper than gas and nuclear. But this young, ambitious industry can go even further. The Government can help us by continuing to hold fiercely competitive auctions for future projects, as it has promised, and by putting offshore wind at the heart of its upcoming Industrial Strategy.

“It’s great to see these excellent results for offshore wind. It’s important that innovative renewable technologies, including wave energy and tidal energy projects also have a route to market, so different mechanisms are needed to ensure these cutting-edge technologies can develop. Tidal energy projects are already showing cost reductions and with the right encouragement can undergo the same sort of journey as offshore wind. Onshore wind is the cheapest from of new power, so it deserves an opportunity to compete too”.  

Jonathan Marshall, energy analyst at the Energy and Climate Intelligence Unit

“Having put the groundwork in, the UK is now poised to reap the rewards from unprecedented falls in costs in offshore wind. These latest results show that offshore wind is no longer an expensive technology. It is much cheaper than new nuclear reactors, is heading for cost parity with the cheapest technologies, and with an increasingly UK-based supply chain.

“With an expanse of shallow waters surrounding us, the UK now has the chance to consolidate our position as the European champion of offshore wind. However, to garner the full benefits of this revolution, the government should continue to boost smart and flexible technologies that keep the lights on when the wind doesn’t blow and allow consumers maximum control over their energy bills.

“In addition to offering a saving of up to £8 billion a year from national energy bills, accelerating progress towards a smart grid will allow us to cut carbon emissions while maintaining the reliable electricity system we are accustomed to."

Gina Hanrahan, acting head of policy at WWF Scotland

“These results are historic, with offshore wind costs blowing all expectations out of the water and halving in just over two years. We already knew that onshore wind and solar were cheaper than expensive nuclear but these results show that offshore wind is also competitive with new gas. Renewables are working and becoming a central part of our energy mix.  It’s great to see the Moray Firth project secure a winning bid, powering close to a million homes and helping to tackle polluting carbon emissions.

“If we’re to see further low cost, carbon cutting offshore wind, the UK government needs to provide a stable policy environment and a pipeline of future support contracts.”