The Green Transition: CfDs & The Crown Estate
Weekly analysis of the shift towards a new economy.
Dear Readers,
Happy Friday from the Spotlight on Policy team.
Would you like eight copies of Britain’s best political weekly delivered to your door, for less than the price of a takeaway coffee? Would you like full access to online content included in the price? You’re in luck. Subscribe to the New Statesman now – just £2 for 2 months.
Our sustainability correspondent, Megan Kenyon, is writing for us this week, on the nitty-gritty of Labour’s new Contracts for Difference offer.
Lets get right into it.
CfDs & The Crown Estate
There is no one in government with a more ostentatious title than Chris Stark. Just four days after Labour formed the new government, the ex-chief executive of the Climate Change Committee was appointed the new “Head of Mission Control for Clean Power 2030” and will work with Ed Miliband and his team to oversee efforts to achieve this ambitious goal.
Many in the energy sector have struggled to hide their jealousy of Stark’s snazzy job title. But appearances aside, it’s clear there is a lot of work included in his new role. Last week, the government launched one of its headline policies, GB Energy, a new publicly owned company which will help to channel investment into renewable projects. This week, it outlined new plans to ramp up the amount of money allocated to the next auction round for Contracts for Difference (CfDs), the government’s main mechanism for supporting low-carbon energy generation (solar power and wind farms).
International energy markets – and particularly the wholesale cost of electricity – are known to be volatile and can often fluctuate. CfDs work by offering generators a strike price for electricity which they will be given throughout their contract. This offers investors more certainty; they are given access to government subsidies if prices go below the strike price set in the contract. In September last year, the previous Conservative government had a particularly embarrassing moment when they failed to secure a single offshore wind farm in the fifth round of auction.
Evidently, to avoid this, and to accelerate the UK’s progress to renewables, the Department for Energy Security and Net Zero (DESNZ) has upped the amount of money allocated to the next CfD auction by 50 per cent. The government has said its plan to fork out a £1.5bn budget for CfDs is the “largest ever budget for delivering new homegrown clean energy projects in the UK”. Included in this is a £1.1bn boost for offshore wind. This is particularly significant following the announcement of GB Energy’s new partnership with the Crown Estate which oversees a £15.5bn portfolio of land, including miles of seabed ripe for windfarms. A further £185m has been allocated to onshore wind and solar, and £270m has gone to “emerging technologies”, including floating offshore wind and tidal power.
This 50 per cent boost has been welcomed by many in the energy and environment sector. Emma Pinchbeck, the chief executive of Energy UK, the industry body that represents those working in the energy sector, described the move as a “real boost for our clean energy ambitions”. She said: “The sooner we can get new wind and solar projects up and running, the sooner we can boost our energy independence.” But she added a not of caution, saying that to achieve clean power by 2030, “the vast majority of capacity must be delivered through this auction round and next year’s”. Pinchbeck described this as a “huge challenge” but said that the additional funding is “certainly a step in the right direction”.
But whether the projects that arise from the next freshly funded CfDs process are successful or not is dependent on access to grid connections. The first of Labour’s five missions was to “get Britain building again” – in other words, reform the planning process to speed this process up. It’s clear the government is serious about this – the new Chancellor, Rachel Reeves, was quick to discuss planning in her first few weeks in the role. And Miliband’s lifting of the ban on onshore wind less than 72 hours after taking office shows the government is willing to pull key planning levers.
Still, with the 2030 deadline less than six years away, it will take more than an increase in funding to accelerate our progress towards clean power. The head of Mission Control, Chris Stark, and his team undoubtedly have their work cut out.
To enjoy our latest analysis of politics, news and events, in addition to world-class literary and cultural reviews, click here to subscribe to the New Statesman. You'll enjoy all of the New Statesman's online content, ad-free podcasts and invitations to NS events.
For more on how our advertising services can support your organisation, please visit our page on Spotlight Marketing Solutions
or contact us at client.solutions@newstatesman.co.uk
The Green Transition is produced by Spotlight, the New Statesman's online policy section and print supplement. Spotlight reports on policy for the people who shape it and the business leaders it affects. Explore our in-depth reporting and analysis here.
Thank you for reading.
Please send any news or comments to: jonathan.ball@newstatesman.co.uk
I thought wind was so cheap. Why does it need subsidies?