Category Archives: Energy

Energy

UK Sees 5% Rise in Energy Bills This Winter

As winter approaches, households in Great Britain are bracing themselves for a challenging season. Energy bills are set to increase by 5% starting January. This could result in households having to squeeze their budgets to make space for this extra expense. 

Analysts predict that the government’s energy price cap could surge to £1,930 per year for the typical gas and electricity bill. This unwelcome development is attributed to a notable uptick in gas market prices, prompting concerns about the financial strain on households during the colder months.

 

Market Analysis and Projections

Martin Young, an analyst at Investec, anticipates a “tough winter ahead”. This comes with the surge in gas market prices that is expected to result in an average increase of £100 per year in the energy price cap. 

Young’s estimates project the cap to rise to an average of £1,928 for most household energy bills between January and March, up from the current £1,834. These projections are rooted in the recent escalation of wholesale market prices for gas and electricity, triggered by geopolitical events such as the Israel-Hamas conflict.

 

Rising Concerns and Standing Charges

The escalating energy costs compound the issue, with standing charges doubling over the past two years, adding to the financial burden on consumers. Standing charges, akin to line rental for a phone, have come under scrutiny, leading to a review by the energy regulator Ofgem. 

Some households have faced hikes by £300 a year since October, explains energy champion, Warmable. This causes concerns about fairness and the potential impact on low-income households.

 

Ofgem’s Response and Consumer Protection

Tim Jarvis, Ofgem’s Director for Markets, acknowledges the ongoing debate about standing charges, emphasizing the need for a comprehensive review. The regulator is committed to protecting consumers and ensuring fair pricing. 

Ofgem’s focus on customer support includes the removal of the ‘prepayment meter premium’ to ensure equitable standing charges for prepayment customers. Additionally, the regulator has launched a consultation on standing charges, inviting input from stakeholders to shape future policies.

 

Government Support and Affordability Challenges

Looking back, the government’s support package, including a universal £400 payment under the Energy Support Bill, assisted households in the previous winter. However, the absence of a similar support measure this year, combined with the 5% increase in the price cap, raises concerns about affordability. 

The government’s expenditure on energy-related support measures reached £78 billion in 2022-23 and 2023-24. This reflects the financial strain imposed by rising energy prices.

 

Ofgem’s Initiatives and Future Plans

Jonathan Brearley, CEO of Ofgem, acknowledges the challenging circumstances and emphasises that the rise in energy bills is a response to the increased wholesale cost of gas and electricity. 

Ofgem remains committed to supporting consumers, with plans to remove the ‘prepayment meter premium’ permanently. The regulator is actively seeking feedback on proposed changes to standing charges, reflecting its dedication to addressing the concerns of various customer segments.

 

Proposed Changes and Customer Impact

Ofgem’s proposed enduring solution aims to levelise standing charges for prepayment meter and direct debit customers, aligning with the end of government support in April 2024. 

The consultation outlines measures to share bad debt costs more equally across customers, potentially saving prepayment meter customers £50 per year but adding £20 per year for direct debit customers. Ofgem seeks input from all stakeholders to inform these decisions.

 

Customer Outreach and Industry Standards

Ofgem’s recent efforts focus on improving customer service standards and financial resilience among energy suppliers. The regulator expects suppliers to prioritise vulnerable customers and proactively offer support, including affordable payment plans and repayment holidays. 

Ofgem’s robust rules aim to protect consumers, with a keen focus on suppliers using profits to enhance their capital position before paying dividends.

 

Market Dynamics and Consumer Choices

Despite the challenges, Ofgem notes a positive shift in the market, with the return of choice for consumers. The availability of various tariffs, including fixed-rate options and flexible deals below the price cap, provides consumers with alternatives. Ofgem encourages consumers to explore these options, consider their priorities, and seek independent advice to make informed choices.

As the winter energy surge approaches, households in Great Britain face the prospect of higher energy bills, driven by increased gas market prices and geopolitical events. Ofgem’s proactive measures, including the review of standing charges and the ongoing consultation process, demonstrate a commitment to addressing consumer concerns. 

While the 5% rise in energy bills poses challenges, the regulator’s emphasis on fairness, transparency, and consumer support provides a glimmer of hope for households navigating the winter energy landscape.

 

Energy, News

Businesses urged to revisit energy options amid Red Sea conflict

Following a spate of attacks impacting shipping routes in the Red Sea, commercial energy and sustainability consultancy Advantage Utilities has urged businesses to revisit other energy options in light of additional costs and delays. 

With freight companies sailing around Africa to avoid turmoil throughout the region, businesses should explore their energy options including optimisation technology to reduce energy consumption, and also consider flexible procurement methods or longer term energy contracts. These can minimise exposure to surges in wholesale energy price and increase sustainability where consumption is reduced via more efficient practices and equipment.

Last month, wholesale markets experienced a sizeable price jump in the price of oil and gas, following attacks orchestrated by the Houthis. Q1-24 gas recently jumped by 13% at one point, whilst Brent Crude rose by nearly 5%.

Advantage Utilities CEO Andrew Grover, cautioned that further price increases may still occur in the current bearish energy market, stating: “Should the ongoing conflict escalate further, the negative bearing on world energy prices could be significant. Disruption lasting for two more weeks could increase prices further. This is at the forefront of our outlook as we head into 2024. Businesses should consider how they would react if further disruption does occur, and exploring the benefit of securing longer term or flexible traded contracts should be considered as a means of mitigating further volatility in future.”

In addition to disruption in the Red Sea, the Russian invasion of Ukraine continues to be a source of uncertainty for energy markets. Following recent escalation in December, the effect on markets would ordinarily have been one of shock. But with much of Europe already using alternative provisions, the impact of the conflict has been somewhat limited, with above-average EU gas stock fullness cushioning potential price increases.

However, uncertainty remains an ongoing issue for markets, with the unpredictable developments in several conflicts continuing to cause spikes in wholesale energy market prices.

“To mitigate ongoing uncertainty, businesses can better prepare for unforeseen wholesale price increases by exploring options including voltage optimisation, energy efficient equipment and heat pumps. This is in addition to onsite generation and flexible procurement methods and, where appropriate, through longer term energy contracts,” Grover adds.

Further guidance on energy developments and solutions can be found within Advantage Utilities’ most recent report here.

For more information on Advantage Utilities, visit www.advantageutilities.com

Energy, News, Sustainability

EDP Renewables acquires a 50 MW Battery Storage project from ILI Group

Scottish clean energy developer Intelligent Land Investments (ILI) Group has announced the successful sale of their 50MW Battery Storage project Balnacraig, Alness, Highlands to EDP Renewables (EDPR), a global leader in the renewable energy sector.

The Balnacraig project, located near Alness, Highlands, will contribute with approximately 50 MW of capacity to the region’s power grid and hold enough energy to power every home in the Highlands for 2 hours. This asset will also play an important role in grid management, offering flexibility and supporting the country’s renewable energy strategy. The construction is set to kick off in a few months, with the aim of start operation until the beginning of 2025.

This significant transaction brings the total to 900MW of energy storage projects that ILI Group has progressed to the development stage. The company has an ’overall portfolio of 4.7 GW of energy storage projects across Scotland, including 2.5 GW of Pumped Storage Hydro and 2.5 GW of Battery Storage.

With over 15GW of wind and solar energy assets developed globally, EDPR brings substantial large-scale project expertise. The company is investing in optimizing resources and improving energy efficiency by developing energy storage projects in the UK, one of its key European markets. Early this year, EDPR acquired its first Battery Energy Storage System in Kent, England. EDPR’s experience spans Europe, North and South America, and Asia Pacific markets.

Mark Wilson, CEO of ILI Group, said, “We are pleased to announce this sale of our 50MW Balnacraig battery storage project to EDPR, a global leader in renewable energy development. Energy storage is absolutely vital to supporting the continued growth of renewables and ensuring grid stability as we work to decarbonize our energy system. Our pumped hydro and battery storage portfolio represents crucial infrastructure for balancing supply and demand. We are delighted to intrust this project to EDP, a company that shares our vision for a greener, more resilient energy system.”

Carmen Caminero, Country Manager of UK at EDP Renewables, highlighted that “EDPR is ramping up its investments in solutions that can contribute to a higher use of renewable electricity and maximize energy efficiency. By adding this new asset to our portfolio in the UK, a leading market in storage systems, we are paving the way to other investments in this crucial technology for a sustainable energy transition” 

In its updated Business Plan for 2023-2026, EDPR aims to achieve a storage capacity of over 500 MW, with co-located assets and stand-alone assets such as this project. Besides the projects in the UK which amount 100 MW, EDPR also has nearly 200 MW of contracted storage capacity in North America and over 4 MW under construction in the Asia-Pacific region.

The project will play a crucial role in the UK’s energy landscape, providing essential storage capacity to accommodate the increasing integration of renewable energy sources into the grid. It underscores ILI’s reputation as a leader in the clean energy sector in the development and deployment of large-scale energy storage projects.

Carbon Reduction, Energy, News, Sustainability

Edwin James Group cuts carbon footprint by 10%

In its most recent Environmental, Social and Governance (ESG) report released today, leading engineering services provider Edwin James Group reported a 10% reduction in its Scope 1 and 2 carbon emissions and reaffirmed its long-term commitment to its ESG ambitions.

In line with its aim to source all energy needs from renewable sources, more than 90% of Edwin James’s office electricity requirements have come from renewables in the last financial year. Energy reduction efforts across multiple sites have removed 55 tonnes of CO2e through reduced gas and electricity consumption, representing an 18% decrease from the previous year.

Outside of the office environment, over 35% of company cars are now fully electric. To accelerate the move to a greener fleet, the company recently ran a pilot programme to start the replacement of around 70 diesel vans with eco-friendly alternatives – this was the initial step towards electrifying the entire vehicle fleet.

 

Christopher Kehoe, CEO of Edwin James Group, said: “As a group, we believe that our success should not only be measured by financial achievements but also by the positive impact we make on the world around us.

“Our path towards 2030 continues to drive our efforts to become a more responsible company and to work with suppliers and customers who share our vision. Our commitment to our environmental goals and advancement towards net zero remains a key driver for the entire business. As does the promotion of safe and healthy work practices coupled with providing development opportunities at every level.”

 

At the heart of the Edwin James Group is the development of people and the strategy to nurture home-grown talent from “apprentice to boardroom”. In 2023, the group opened its third purpose-built EJ Academy training facility focussed on developing digital skills.

 

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Pictured: Christopher Kehoe, CEO

 

Energy, News, Property

National Association Of Property Buyers Calls For More Efficient Rules On Energy Regulations

LANDLORDS want “clearer” rules on energy efficiency regulations, a leading property association has said.

A new survey released last week by the Social Market Foundation – a cross party think tank – found an overwhelming majority (79%) of landlords believe they should be subject to stricter energy efficiency regulations.

Private sector landlords are in fact more supportive of raising the MEES to grade C than the general population, with only 11% opposed to such a move.

 

Commenting on the findings, Jonathan Rolande, spokesman for the National Association of Property Buyers, said: “Even if it involves expensive improvements, landlords just want clarity – not goalpost moving.

“Improvements such as double glazing, insulation and efficient boilers last decades so are in effect a one-off cost.

“Landlords should be accepting of them – they can be deducted for tax, wiping off up to half of the outlay, and they make tenants, who cannot do such work themselves, more comfortable and better off. And that’s before we consider environmental benefits.

“With everybody worried about high heating costs this winter, landlords should not expect their tenants to have to live in a property that is not as well insulated as their own home.”

 

In September, Rishi Sunak scrapped plans to require all landlords to upgrade their properties to at least EPC C by 2028, citing the need to protect tenants from unfair price hikes in rent due to the cost of renovations.

Climate, Climate Tech, Energy, News

Mocean Energy heads to COP 28

Scots firm hopes to ride wave of Gulf interest in ocean energy

Scots ocean energy pioneer Mocean Energy is heading to COP 28 this week as part of a delegation of 19 leading companies seeking to showcase Scotland’s ambition and expertise in net zero.

Company co-founder and Managing Director Cameron McNatt will take part in an intensive programme of events in the United Arab Emirates where he and other business leaders from Scotland will meet potential investors and business collaborators.

It is hoped the ocean energy firm will generate interest from delegates and governments keen to use ocean waves and offshore solar as new and untapped forms of low carbon power.

Mocean Energy is currently a key participant in the £2million Renewables for Subsea Power (RSP) programme which has connected Mocean’s 10kW Blue X wave energy prototype with a Halo underwater battery system developed by Aberdeen intelligent energy management specialists Verlume.

The two technologies are currently in the seas off Orkney where they are delivering low carbon power and communication to infrastructure including Baker Hughes’ subsea controls equipment and a resident underwater autonomous vehicle (AUV) provided by Transmark Subsea. The programme has been supported by industry partners alongside the Net Zero Technology Centre (NZTC), which is also attending the COP.

In the host city Dubai, meetings will be centred largely in the conference’s ‘green zone’, where attendees will explore how to turn climate policy into concrete action. The delegation has been organised by The Scottish Chambers of Commerce alongside The Scottish Government and Scottish Development International, and delegates will be supported by a number of ‘Global Scots’ tasked with opening doors for the Scottish firms.

“This COP is focussed very much on what we can do in practical terms, and I am keen to showcase how ocean energy can make a significant contribution to a net zero world,” says Mocean Energy Managing Director Cameron McNatt.

 

Earlier this month Mocean Energy attended the international ADIPEC energy conference in Abu Dhabi, where team members met Dr Sultan Ahamed al Jabar, President-Designate for COP28 and chair of Masdar, the UAE’s state-owned renewable energy company.

 

“There is a genuine interest in the Gulf region in transformational technologies which can make a significant green impact in the years ahead. The Scottish Chamber, the government and SDI have brought together a terrific delegation of world-leading Scottish firms and I hope our joint presence will create interest and inspiration leading to the adoption of Scottish technologies which can accelerate the low carbon transition,” McNatt concludes.

 

The delegation of 19 industry-leading Net Zero companies builds on the already well-established relationship Scotland enjoys with the UAE, and will showcase its expertise and strength across a range of sectors, including clean and renewable energy, hydrogen, space and other innovative technologies.

COP28 will further Scotland’s Net Zero interests and showcase its innovation strengths in key net zero sectors to a global audience, while increasing business-to-business engagement that can foster future collaboration in meeting the challenges of achieving Net Zero.

The delegation will include businesses from throughout Scotland including:

 

  • Aquatera
  • Astroagency
  • CCU International
  • Digital Content Analysis Technology Ltd
  • Green Bioactives Limited
  • Hydrogen Vehicle Systems
  • Krucial
  • Mocean Energy
  • Motive Offshore Group
  • Net Zero Technology Centre
  • Norco Group
  • Nova
  • Orbital Marine Power
  • ReVentas
  • Roslin Technologies
  • Siccar
  • Solariskit
  • Storegga
  • Sunamp
Energy, News

Expert Advice: Ofgem warns of soaring bills, experts offer tips to slash expenses

  • Ofgem raises energy price cap by 5% from £1,834 to £1,928 starting January 1.
  • Financial advisor recommends simple adjustments such as switching to energy-efficient bulbs and optimising furniture arrangement for cost-effective efficiency.
  • Cost-cutting tips include efficient appliance use, insulation investments, draught-proofing, billing optimization, hot water efficiency, and smart technology adoption.

 

Energy bills will rise again from January as hopes for relief from the cost-of-living crisis are put on hold. Ofgem announced its latest price cap on Thursday, which will increase by 5% (from the current £1,834 to £1,928) from January 1 for a typical dual fuel household in England, Wales and Scotland, the regulator has announced.

For those unable to make significant investments, smaller changes can still make a substantial impact, says finance expert Michael Charalambous from Invezz.com.

Swapping to energy-saving light bulbs, reevaluating furniture placement, and employing draft excluders contribute to efficient energy use without breaking the bank.

 

Appliance efficiency: Efficient use of appliances, like washing machines and dishwashers, can lead to substantial savings. Small adjustments, such as washing clothes at lower temperatures and running full dishwasher loads, contribute to cost-cutting.

 

Insulation matters: Investing in insulation, starting with cost-effective options like loft insulation, proves highly impactful. Proper insulation can result in significant savings, up to £250 per year in a semi-detached house.

 

Draught-proofing: Blocking gaps around doors and windows can save around £45 per year. Simple DIY measures, such as using draught-proofing strips and seals, contribute to a cosier home and reduced energy bills.

 

Billing optimization: Reviewing energy bills for small savings, switching to paperless billing, and managing accounts online can lead to cost reductions. Regular metre readings, especially with smart metres, ensure accurate billing.

 

Hot water wisdom: Efficient use of hot water, such as using heating controls for hot water tanks and installing eco-friendly shower heads, can lead to substantial savings.

 

Boiler efficiency: Regular boiler servicing and adjusting flow temperatures contribute to efficient heating. Lowering a combi boiler’s flow temperature can save 6-8% on gas bills.

 

Heating controls: Installing and optimising heating controls, including room thermostats and thermostatic radiator valves, can lead to significant savings of around £180 per year.

 

Energy-efficient appliances: Investing in energy-efficient appliances can result in substantial long-term savings. Running costs are crucial considerations, and energy-efficient models can save hundreds of pounds annually.

 

Smart technology adoption: Smart thermostats and energy-saving apps provide real-time insights and control over energy usage. Combining smart thermostats with thermostatic radiator valves enhances control.

 

Energy grants and benefits: Exploring eligibility for energy efficiency grants and benefits, such as the Warm Home Discount, Winter Fuel Payment, Boiler Upgrade scheme, and the Energy Company Obligation (ECO) scheme, can provide financial relief.

 

Charalambous added: “Navigating the current financial landscape in the UK is undoubtedly challenging, given the surge in bills. However, it’s crucial to recognize that every incremental saving plays a significant role in mitigating these challenges. By implementing prudent measures, such as optimising expenses through energy-efficient choices and thoughtful financial planning, we can proactively manage the impact of escalating costs on our financial well-being. Every bit of money saved contributes to building a more resilient and secure financial future.”

 

Awards, Carbon Reduction, Cardiff, Energy, Green Construction, News

Nuvolt Ltd Celebrates Green Business of the Year nomination at Cardiff Business Awards

In an impressive display of commitment to supporting businesses sustainability and innovation, Nuvolt Ltd has been announced as a finalist for the prestigious Green Business of the Year award at the Cardiff Business Awards. This nomination highlights Nuvolt’s impactful contributions both locally and nationally, marking a significant milestone in their journey towards a sustainable future.

Nuvolt, a Cardiff-based renewable energy installation company, has been at the forefront of integrating low carbon technology solutions in a variety of projects across the UK. Their in-house technical capabilities, coupled with a keen eye for design and product knowledge, have set new standards in the renewable energy sector. The company’s approach to each project, whether it involves new developments, refurbishments, or retrofits, is marked by a deep understanding of sustainable practices and innovative technologies.

At the heart of Nuvolt’s success is a close-knit team of net-zero professionals. Their collaborative spirit and expertise have been pivotal in driving the company’s vision forward. “This nomination is a reflection of our team’s hard work and dedication. Each member plays a crucial role in supporting and guiding our client’s journey towards sustainability” said Matthew Phillips, Director, at Nuvolt.

Guiding this dynamic team are Nuvolt‘s visionary directors, whose experience and leadership have been instrumental in shaping the company’s path. Their strategic direction and commitment to quality have not only fostered a culture of excellence within Nuvolt but has also contributed significantly to the broader goal of achieving Net-Zero Carbon ambitions for clients and businesses in Wales and across the UK.

Nuvolt’s recognition at the Cardiff Business Awards reinforces the belief that sustainable practices and business success can go hand in hand, setting an inspiring example for others in the industry. Nuvolt’s ambitions align with the Welsh Government’s Net Zero Strategic Plan, showcasing an ambitious path towards decarbonisation.

For more information about Nuvolt and their projects, visit www.nuvolt.co.uk or contact 0330 311 2454.

 

About Nuvolt Ltd

Founded in 2021, Nuvolt Ltd is a leader in advising, designing, constructing, maintaining, and optimizing low carbon technology solutions. Based in Cardiff, South Wales, the company is committed to bringing innovative sustainable solutions through integrated low carbon technology, contributing significantly to the UK’s Net Zero Carbon ambitions. Installation of Solar, Battery Storage and EV Charging Stations.

 

Energy, FInance, News

Offshore wind giant secures £370 million UKEF-backed facility to expand UK business

The UK’s export credit agency has issued a loan guarantee allowing Seaway7 to secure a £370 million loan coordinated by HSBC and scale up its UK operations

  • UK Export Finance (UKEF) has issued a loan guarantee so that fixed offshore wind specialist Seaway7 can access a £370 million funding package
  • Issued under UKEF’s Export Development Guarantee facility, the funding will allow Seaway7 to develop its UK sites and fund its current fleet
  • The government-backed deal will support economic growth and see the creation of over 100 new jobs by the end of the decade

In a move which supports the growth of the North Sea offshore wind industry, UK Export Finance (UKEF) has issued a loan guarantee so that Seaway7 can access a £370 million funding package.

The export credit agency has issued the guarantee under its Export Development Guarantee (EDG) so that the offshore wind specialist can invest in its UK operations. The UKEF guarantee covers 80% of the total loan, which has been coordinated by HSBC and with Citibank, Credit Agricole Corporate and Investment Bank, DNB, HSBC and ING as Mandated Lead Arrangers.

UKEF’s backing is expected to help the firm win and service Engineering, Procurement Construction and Installation (EPCI) contracts for fixed offshore wind projects which will generate UK export revenue. Seaway7 has completed successful offshore wind projects in a range of markets, including Taiwan, the USA and continental Europe.

Further development of Seaway7’s UK business is also set to create over 100 new jobs in Aberdeen’s offshore wind industry by the end of the decade, supporting regional growth and the government’s continued aim of decarbonising the economy by 2050.

Lord Offord, Minister for Exports, said:

“This is a great development for Scotland’s renewable energy industry, set to create over 100 jobs in Aberdeen and consolidate its place as a global leader in offshore wind expertise.

“Through UK Export Finance, this government is unlocking new opportunities for sustainable trade and investment – and securing the long-term prosperity of the United Kingdom.” 

Philip Lewis, Global Co-Head of Export Finance for HSBC, said:

“We are thrilled to have supported Seaway7 by coordinating this important transaction, which will further enable the company to provide invaluable support to the offshore wind industry and help meet the rising demand for renewable energy”. 

Seaway7’s Aberdeen base manages all building, use and maintenance of vessels belonging to the company.

Energy, News

Boost for offshore wind as government raises maximum prices in renewable energy auction

The government has increased the maximum price for offshore wind projects in its flagship renewables scheme to further cement the UK as a world leader in clean energy.

Following an extensive review of the latest evidence, including the impact of global events on supply chains, the government has raised the maximum price offshore wind and other renewables projects can receive in the next Contracts for Difference (CfD) auction to ensure it is performing effectively.

The CfD scheme ensures renewable energy projects receive a guaranteed price from the government for the electricity they generate, encouraging continued investment in the UK – which is already home to the world’s 5 largest operational offshore wind farm projects and has increased electricity generation from renewables from 6% in the first quarter of 2010 to 48% in the first quarter of this year.

The maximum strike price has been increased by 66% for offshore wind projects, from £44/MWh to £73/MWh, and by 52% for floating offshore wind projects, from £116/MWh to £176/MWh ahead of Allocation Round 6 (AR6) next year.

This will help ensure projects are sustainably priced and economically viable to compete in AR6, building on the success of previous CfD auctions. These have so far awarded contracts totalling around 30GW of new renewable capacity across all technologies since 2014.

In AR6, offshore wind will also be given a separate funding pot in recognition of the high number of projects ready to participate. This will ensure healthy competition among a strong pipeline of projects, helping the UK deliver on its ambition of up to 50GW of offshore wind by 2030, including up to 5GW of floating offshore wind.

First established nearly a decade ago, the CfD has helped reduce the cost of renewables. It aims to deliver good value to electricity consumers and drive down costs. The government’s ambitions will create tens of thousands of new jobs by 2030, while also delivering the Prime Minister’s priority of growing the economy.

See Contracts for Difference (CfD): Allocation Round 6.

The government is also today (Thursday 16 November 2023) publishing developed proposals to review applications from the 2025 auction not just on their ability to deliver low cost renewable energy, but also on how much a project strengthens the environmental and economic sustainability of the industry. As part of this, a project’s social impact will also be considered – including how supply chains affect jobs and communities.

Energy Security Secretary Claire Coutinho said:

The UK is home to the world’s 5 largest offshore wind farms projects.

Today we have started the process of our latest Contracts for Difference auction for renewables, opening in March next year. We recognise that there have been global challenges in this sector and our new annual auction allows us to reflect this.

This is a vital part of our plan to have enough homegrown clean energy, bringing bills down for families and strengthening our energy independence.

Minister of State for Energy Security and Net Zero Graham Stuart said:

Last year’s Contracts for Difference scheme saw more than 90 clean, homegrown energy projects and today we have shown our ongoing commitment to retaining our global leadership in renewable energy.

This critical update to the scheme’s design provides further clarity and confidence to the offshore wind sector and ensures the scheme remains competitive for renewable developers investing in new low carbon technologies.

I look forward to securing another year of successful contracts in 2024, creating skilled jobs, reducing emissions and delivering maximum amounts of reliable clean energy for the British public.

Exchequer Secretary to the Treasury Gareth Davies MP said:

This scheme has played an indispensable role in driving forward renewable energy projects.

Supporting industry to make investments in renewable energy is essential to achieving our net zero goals, vital to attracting investment to our coastal communities, supporting jobs, and levelling up the country. I am proud to see Britain remain at the helm of green energy innovation as we move ahead.

The government is also increasing maximum bid prices for other technologies, offering certainty for developers, and keeping the UK at the cutting edge of all renewables. These include:

  • geothermal by 32% – from £119/MWh to £157/MWh
  • solar by 30% – from £47/MWh to £61/MWh
  • tidal by 29% – from £202/MWh to £261/MWh3

Contracts for Difference are currently awarded based on the outcome of a competitive auction.

The consultation published today invites views on how Sustainable Industry Rewards, formerly non-price factors, could be incorporated into the 2025 auction process. This would be for offshore wind and floating offshore wind companies and would mean additional payments if they reduce the carbon emissions in their supply chains, or if they improve their social benefits, ensuring AR7 is the cleanest and most impactful auction yet.

See the consultation: Introducing a Contracts for Difference (CfD) Sustainable Industry Reward.

This could be done by investing in high-skilled jobs, using more environmentally friendly factories to assemble components, such as wind turbines, investing in new manufacturing facilities or skills in deprived areas, or finding new, innovative ways to reduce their carbon emissions, for example.

Building a more secure energy future will increase developer confidence in the sector every year. It will also enhance the UK’s reputation as one of the most attractive places to invest in renewables.

The introduction of annual auctions last year means project developers now have more frequent opportunities to participate. This also allows the government to respond more quickly to ensure the scheme continues to support the sector, maintain investment and continue its success.

The government is also taking significant steps to ensure homes and businesses across the country can access the electricity produced from these new renewable projects by accelerating grid infrastructure and connections. A Connections Action Plan will be published later this year to reform the connection process and reduce connection timescales.

RenewableUK’s Chief Executive Dan McGrail said:

Ensuring that the UK continues to unlock investment in renewables is critical to improve Britain’s energy security, drive economic growth, support thousands of new green jobs and enable us to continue to create a lowest cost electricity system for billpayers. With intense international competition for investment in renewables, we welcome the strong commitment to the sector shown by government today, which demonstrates that the UK is intent on remaining a global leader in offshore wind, as well as innovative technologies like floating wind and tidal stream.

There is the potential for the government to attract a record level of private investment in offshore wind projects next year, with at least 10 projects likely to be eligible, able to power 8.5 million homes each year and reduce the UK’s need for gas by 39%. The framework they’ve set out today is a significant step forward in securing this. Although renewables haven’t been immune from the recent rises in financing and supply chain costs which all major infrastructure projects have faced, they remain the lowest cost means of generating new electricity. Even at these new prices, there is still no cheaper way to meet the UK’s rising electricity demand and increase our energy security.

Emma Pinchbeck, Energy UK’s Chief Executive, said:

Offshore wind is the flagship technology for the UK in terms of meeting our net zero targets. It’s also a critical one to ensuring our energy security through generating more clean domestic power – at the same time as boosting our economy and creating jobs. So we very much welcome the government responding to the increased global competition and the economic challenges facing developers by showing more ambition and giving greater confidence to investors, which will help build a domestic green powerhouse that benefits our own economy and people.

Wider stakeholder commentary

Tom Glover, RWE UK Country Chair, said:

RWE welcomes the government’s decision on the administrative strike prices for renewables technologies bidding into Allocation Round 6, and its recognition of broader international global supply chain and inflationary cost pressures within the clean energy sector. We also welcome the decision to revert to a separate allocation pot for offshore wind for Allocation Round 6, which should help to secure future capacity towards the UK’s 50GW by 2030 target.

The timely and efficient deployment of renewables remains the lowest cost and best way of achieving the UK’s domestic energy security, as well as net zero. Today’s announcement represents a positive step towards maximising the UK’s clean energy potential, for ensuring sustained lowest prices for consumers and creating good quality jobs.

Keith Anderson, Chief Executive of ScottishPower, said:

Bringing more green energy onto the system is the single most important thing we can do to cut customers’ bills and strengthen our energy security. This is a welcome signal that the government is listening and is committed to getting the UK’s pipeline of offshore wind projects moving again.

The real test of that ambition will come when the overall budget for the next auction round is set next year. But, no doubt about it, this is a step in the right direction.

Chris Hewett, Chief Executive of Solar Energy UK, said:

The Contracts for Difference system has been a major factor in the growth of the UK’s solar power sector, by providing investors with secure and reliable incomes. Solar remains the cheapest source of power in the UK, according to the government’s own figures, although lately installation costs have been affected by factors outside the control of the industry, notably the war in Ukraine. So it is gratifying that that the maximum bid price has been raised by a significant amount, which should bolster growth further towards reaching the capacity target of 70GW by 2035.

Duncan Clark, Head of UK Region at Ørsted, said:

We welcome this important and positive step towards getting the next auction round right, which is essential for both UK energy security and the wider supply chain. This is a clear indication from government that offshore wind can and will be the backbone of our future energy mix – providing low-cost, low-carbon electricity, creating jobs, supporting communities and attracting investment into the UK.

Alistair Phillips-Davies, Chief Executive, SSE plc, said:

Securing enough projects through the next 2 auction rounds will be critical if the UK is to deliver on its stretching renewables targets and we therefore welcome today’s announcement which is an important step towards this goal. We now look forward to continuing to work constructively with the UK government on further details related to next year’s auction, as well as on wider issues such as consenting, in order to ensure as many projects as possible are able to bid for contracts to drive the right outcomes for consumers, energy security and the climate.

Halfdan Brustad, VP UK Renewables at Equinor, said:

When it comes to offshore wind, the UK is Equinor’s most important market. Equinor, like the UK, is committed to becoming net zero by 2050. DESNZ’s published AR6 parameters reflect the changing economic conditions for domestic renewable energy production including both bottom-fixed and floating offshore wind, which is warmly welcomed by Equinor. In a globally competitive environment, ensuring the right CfD parameters enables the UK to remain one of the most attractive markets to develop offshore wind.

Matthieu Hue CEO at EDF Renewables UK, said:

Today’s announcement on the Administrative Strike Price levels is very welcome news, and is a step in the right direction to putting the UK back at the forefront of renewable deployment.

The Contract for Difference is fundamentally a good mechanism, and a sustainable administrative strike price will drive investor confidence, economic growth and lower electricity bills.

It is encouraging that the concerns raised by ourselves and the rest of the industry in recent months have been listened to and we look forward to seeing further detail on the budget parameters over the coming year to match the ambition of today’s announcement.

The framework set out in relation to floating wind places us in a strong position to start to realise the many benefits that this emerging technology offers. The most advanced projects, such as our Blyth 2 Demonstrator, will enable the UK to secure a head start in the global race to develop floating wind.

Claire Mack, Chief Executive of Scottish Renewables, said:

Industry has repeatedly warned of the cost pressures facing our industry so we’re pleased the UK government has responded by delivering strike prices which should go a long way to restoring investor confidence in the Contracts for Difference scheme as a viable route to market for offshore wind.

As well as the social, environmental and economic benefits that renewable energy projects can deliver, bringing forward more of these developments will not only deliver affordable electricity and savings to bill-payers but will improve energy security and reduce consumer exposure to high, volatile gas prices.

It is therefore now essential that the UK government provides a budget for Allocation Round 6 which aligns with Scotland’s renewable energy ambitions and maximises the number of projects which can be successful in winning contracts to deliver clean power for consumers.