Earlier this month, the Government announced its plans to introduce funding for the ‘Contracts for Difference’ scheme. The scheme will encourage the generation and consumption of low-carbon, renewable energy as a power source. Millions of Pounds will be available from April 2017, and will be auctioned for investments in new low-carbon, renewable power projects across the UK, with the incentive to have project ready to generate in the early 2020’s.
The money will be invested in a wide variety of renewable energy projects, in an attempt to provide power to the UK system from a multitude of different sources. The aim is to reduce the threat of a blackout when UK power is under pressure. Furthermore, in the event that a fault occurs in a particular plant/station/farm, then we would have alternative power sources to fall back on. Take for instance the impact of the closed nuclear power stations across France at the minute, where due to one or two nuclear faults, the majority of nuclear power stations have been shut down and are being both investigated and repaired for further use, despite an increasing demand for power over winter. This is having such a large impact as France relies so heavily on nuclear power to make up around 70-80% of their demand. Therefore, one of the aims of the Contracts for Difference scheme is to create an evenly spread, diverse, and secure power supply for the UK, by implementing different types of renewable generation
Some examples of the renewable energy projects are: Offshore Wind Farms, Anaerobic Digestion Plants, Biomass Stations, Tidal and Wave Generation, and possibly Geothermal Power. The overall aim is to provide enough renewable power for up to 1 million homes and businesses, and to cut emissions by 2.5 million tonnes per year from the early 2020’s.
This news comes after the announcement made recently to phase out coal power stations completely by the year 2025, which provides more incentive to get these projects up and running in good time. Coal power stations are closing at a dramatic rate already, with nothing much to replace their power generation and contribution to UK supply. At the moment, some coal stations that were previously closed have been placed on standby with funding from National Grid to help the current pressure on the power system, throughout winter to support peak demand. This indicates how important coal-fired power currently is to the UK, therefore to replace coal, we will need a sufficient amount of renewable power to make up for its loss.
Despite the huge amount of funding for renewable energy generation, Onshore Wind, Solar Power, and Biomass Conversion are being blocked from the scheme so far. These are reportedly some of the cheapest forms of renewable energy projects, however they have been dismissed from the scheme due to the amount of power they can generate. Furthermore, Anaerobic Digestion projects with an expected capacity of under 5MW electricity have also been dismissed from the funding. At the moment it seems that the Government is more interested in large Offshore Wind Farms, and projects, etc to provide a greater power supply, rather than the slightly smaller, lower carbon, renewable projects such as Solar Farms. There is expected to be an annual sum of £290 million from April 2017 for these schemes, which has already been dished out between the major renewable project types. The scheme has been criticised for excluding some renewable projects altogether, and for not funding renewable projects for remote Scottish Islands, where communities would benefit from additional power sources.
The expected outcome of the Contracts for Difference scheme is that there will be an additional 250MW capacity of electricity for UK power supply, increasing generation by 10% in as little as two years’ time if all goes to plan.
Sources: Npower (RWE), SSE, Gazprom Energy, Energy Live News, Ofgem, National Grid, Engie