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Rock-bottom CfD results proof renewables are ‘blowing the competition out of the water’

Image: EDF.

Image: EDF.

The “exceptionally low” results in today’s Contracts for Difference auction are proof that renewables are “blowing the competition of the water”, the green economy has said this morning.

Today the government confirmed the winners of the third CfD auction round, with offshore wind projects clearing at just £39.65/MWh, representative of a ~30% reduction in the two years since the second round delivered offshore wind projects at strike prices of £57.70/MWh.

Lawrence Slade, chief executive at Energy UK, described the results as “tremendously exciting” against the backdrop of today’s climate protests occurring around the globe.

“This shows what can be achieved by providing the necessary certainty for investment, which drives down the cost of decarbonisation, benefits customers and the wider economy, and creates highly skilled jobs and stimulates growth in rural economies.

“The industry has shown it can deliver - with over a third of electricity generation now provided by renewables. We now need the Government to set out a long-term policy framework to deliver on the newly legislated target of net-zero emissions at 2050,” he said.

Jonathan Marshall, head of analysis at the Energy and Climate Intelligence Unit, said signing such deals meant that low carbon electricity is “being locked in for the future”.

“In fact, costs have now fallen so rapidly that it is a government-imposed cap that is limiting the amount of capacity installed. Every passing auction shocks onlookers with record low costs. Now questions may start to be asked if waiting two years between auctions is in the best interest of British homes and businesses,” he added.

Meanwhile Matthew Wright, UK managing director at Ørsted, heralded offshore wind as the newly-crowned “cheapest major source of electricity in the UK”.

“The offshore wind industry has grown significantly in the UK and has worked closely with both the government and the UK supply chain to ensure that the UK reaps the benefits from its world-leading position in offshore wind,” he said.

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