UK TO HOLD YEARLY CONTRACTS FOR DIFFERENCE AUCTIONS FROM NEXT YEAR ONWARDS

Marine Power Systems is delighted to see the UK Government is hitting the accelerator on low-cost renewable power. The auctions for funding through the Contracts for Difference (CfD) scheme will be run every year rather than every two years from March 2023 onwards.

The move will speed up the UK adoption of MPS devices and other renewable power technologies, accelerate the pathway to net zero and boost energy security.  The more we can generate clean, cost effective and secure power at home the less we will be exposed to expensive gas prices set by international markets.

Through running more frequent auctions it is expected that more projects will have the opportunity to compete for revenue support, increasing the pace of technology development. Increasing the level of certainty will serve to accelerate Marine Power Systems installed capacity and deliver economies of scale to further drive down the cost of energy.  A more consistent and predictable deployment of floating offshore wind projects will be established, increasing investor and supply chain confidence in the sector as a whole.

The Contracts for Difference scheme is the government’s main mechanism for supporting low-carbon electricity generation. Contracts for Difference incentivise investment in renewable energy by providing project developers with higher upfront revenue and long lifetimes with direct protection from volatile wholesale prices, whilst also protecting consumers from paying increased support costs when electricity prices are high.

“Offshore wind will play a crucial role in delivering the UK’s net zero targets and a significant amount of that target will be delivered through floating offshore wind”, commented Sue Barr, External Affairs Director at Marine Power Systems, “Whilst fixed offshore wind deployments in shallow waters are expanding, the resource in deep water remains largely unharnessed and represents around 80% of the exploitable energy resources of our oceans. The changes to the CfD regime, in provision of a floating offshore wind minima and yearly auction rounds, creates a market signal and opportunity, which technology and energy developers can turn into a reality. This is great news for MPS and the whole renewable energy sector.”

The recent ScotWind auction provides a clear indication around what the future might hold for UK offshore wind. One of the biggest auctions of its kind in the world, it will bring a further 25GW of offshore wind to Scottish Waters. Importantly for Marine Power Systems, around 15GW of the 25GW of capacity development will be delivered through floating offshore wind.

Governments around the world face similar challenges and need to meet their own net zero targets, so what we are seeing in here in the UK will undoubtedly be replicated globally. Marine Power Systems are in a great position to reap the rewards of the international opportunity. Our optimised energy solutions deliver cost benefits across the entire product lifecycle and are exactly the kind of proposition that project developers and those who invest in them are looking for.

Schemes like Contracts for Difference provide a catalyst for the development of more industrial scale floating offshore wind farms and a rapidly developing global market, which is forecast to be a multi-billion-pound per annum industry by 2030 alone.