Big Six supplier SSE is calling on the government to increase the cap on new offshore wind projects in the UK under the Contract for Difference (CfD) auction to help decarbonise the economy “quicker”.
Chief Executive Alistair Phillips-Davies has written to Energy and Clean Growth Minister Chris Skidmore asking him to reconsider the scale of renewable power that will be required to reduce carbon emissions, particularly as the UK electrifies the heat and transport sectors to deliver the 2050 net zero goal.
He believes offshore wind will play a “crucial role” in providing affordable, low carbon electricity and while the foundations have been laid with the CfD auctions, the ambition for the level of offshore wind to be delivered must be raised “in the context of a net zero target”.
This year’s CfD auction includes a capacity cap of 6GW for low carbon power – Mr Phillips-Davies says increasing this will enable the government to take a “significant first step towards net zero”.
He adds: “The net zero commitment is a positive development but none of us should underestimate the scale of the challenge that it poses.
“Offshore wind will play a crucial role in providing affordable, low carbon power and the Committee on Climate Change (CCC) has suggested 75GW of offshore generation may be required by 2050, compared to 8GW today and 30GW targeted by the government’s Sector Deal for 2030. Increasing offshore capacity in line with the CCC advice is challenging but achievable.
“Increasing the 6GW cap provides government with an opportunity to show that it is serious about net zero and positioning the UK as a world leader in both the offshore wind sector and the fight against climate change. It can do this in a way which is quick, simple and cost neutral for consumers.”
BEIS said its success in bringing down costs in previous CfD rounds has meant it will potentially become harder to ensure competitive tension with a monetary cap alone.
It added the 6GW capacity is almost twice the amount secured in the CfD allocation round 2, which stood at 3.3GW.
A spokesperson said: “Under our world-leading Contracts for Difference (CfD) scheme the cost of renewables has plummeted, allowing us to progress towards our ambitious net zero targets, whilst protecting consumers from increased electricity costs. The cap is set at 6GW to keep this effective bidding system competitive, providing value for money to consumers, and allowing this market to continue to thrive.”