The government is to announce a new auction for both onshore wind and solar, following a four year block.
There will be a Contracts for Difference (CfD) auction for so called Pot One technologies – onshore wind and solar – following a government u-turn.
The announcement was unveiled this morning (2 March) by The Guardian, and has been welcomed throughout the energy industry, as well as by climate activists and groups.
Onshore wind is generally considered to be one of the cheapest forms of renewable energy, and along with solar can help cut costs to consumers by £200m-£300m annually, according to research from Aurora Energy Research.
According to The Guardian, energy secretary Alok Sharma is expected to say that fighting climate change “means making the most of every technology available, and that includes backing more onshore wind and solar projects”.
He is expected to add that the government intends to do so “in a way that works for everyone, listening to local communities and giving them an effective voice in decisions that affect them”.
When the auction will be held and the size of it is yet to be announced, but it will likely deliver new capacity at low prices similar to those seen for offshore wind last year.
The strike prices for offshore wind smashed records in the most recent CfD in September 2019. Prices got as low as £39.65/MWh, 30% lower than the lowest strike price seen in the second CfD auction in 2017.
Such prices have suggested that the technology is no longer nascent, but has become an established technology along the lines of both onshore wind and solar.
The toll of the four year ban
There hasn’t been a Pot One auction for established technologies since the initial round in 2015, effectively restricting the growth of both onshore wind and solar in such a way that it was accused of being a de-facto ban.
This followed then-Prime Minister David Cameron’s comments about onshore technologies being unpopular with the general public, stating “enough is enough”. Such a claim has been rebuffed often by the energy industry, with the Public Attitudes Tracker, published by BEIS, showing support for onshore wind hitting a record high in 2019.
RenewableUK’s then-deputy chief executive Emma Pinchbeck commented at the time that: “The government is being told by industry, consumer groups, the National Infrastructure Commission, its own climate advisors, devolved governments, international investors and now a record breaking 79% of the public and billpayers, to change their policies and support onshore wind. What exactly is stopping them? In a climate emergency, we need to use every tool in the box”.
Due in large part to the removal of Pot One technology CfDs, onshore wind installation has consistently fallen in recent years. It peaked in 2017, with a record high installation of onshore wind of 2,683MW when 343 projects started generating as developers rushed to qualify for government support.
But in 2019, just 629MW of onshore wind came online, from 4 projects in England, 4 in Wales, 6 in Northern Ireland and 9 in Scotland.
Solar shows a similar story, having also suffered from the closure of the Renewables Obligation in March 2017.
Many within the energy industry have been openly critical of the government’s decision not to hold a Pot One CfD auction for the last few years, in particular in light of the legally binding net zero by 2050 target made last year.
RenewableUK’s Project Intelligence team released analysis last year that showed that the country is on track to miss its 2050 target by as much as 40%, due to onshore wind’s installed capacity having stalled at 13.5GW.
CfD announcement a ‘major shift in the right direction’
Many groups are today welcoming the announcement of a Pot One CfD auction, with renewable energy campaigner Alethea Warrington from the charity Possible saying “we can finally celebrate the UK’s cheapest new energy source – onshore wind – being brought in from the cold.
“As our cheapest source of clean energy, onshore wind is hugely popular with people in the UK, who understand that we need to use all the tools in the box to tackle the climate crisis.”
Similarly, Chris Hewett, chief executive of the Solar Trade Association commented that this marked a “major shift in the right direction” for government policy, and a “welcome opportunity for the solar industry”.
“New clean power auctions for Pot One technologies will accelerate the decarbonisation of the power sector and drive the shift towards net zero, bringing with it new jobs, cheaper electricity and opportunities closer to home for Britain’s highly experienced solar investors.
“The government is backing a winner in solar, which is not only the UK’s most popular energy technology, but also highly cost-effective and one which offers unique opportunities to enhance local biodiversity and agriculture,” Hewett added.
RenewableUK, one of the most vocal opponents to the blocking of Pot One CfD auctions welcomed the news, saying that it underlines their commitment to reach net zero emissions and help consumers.
It suggested that new onshore wind will bring billions of pounds of new infrastructure investment along with increased jobs.
Chief executive Hugh McNeal said: “The government is pressing ahead with action to meet our net zero emissions target quickly and at lowest cost to consumers and businesses.
“Backing cheap renewables is a clear example of the practical action to tackle climate change that the public is demanding, and this will speed up the transition to a net zero economy. As one of the UK’s cheapest power sources, new onshore wind projects will be a huge boost for jobs and investment in local economies across the UK”.
While the news has been broadly welcomed, many were still critical that the ban came in to place anyway, highlighting that there is lost time to be made up.
The Green Party’s Caroline Lucas, however, took to Twitter to welcome the news, saying: “Some more good news! Astonishing it’s taken this long but the Govt is finally lifting barriers to our cheapest renewables.
“Ban had led to new onshore wind capacity falling to lowest level since 2011.
“I & many others have been calling for this for years.”