The Contracts for Difference (CfD) scheme could bring a significantly larger share of renewables to the UK’s grid, reaching 6.8GW by the end of the year.
CfDs is the government’s main initiative to encourage low carbon electricity generation by providing project developers with high upfront costs and long lifetimes to protect from volatile wholesale prices.
New research by Cornwall Insight estimates in the first three months of 2021 operational capacity under the scheme rose to 5.6GW.
The analysis suggests offshore wind could become the main driver of the new generation installed under the scheme.
Lee Drummee, Analyst at Cornwall Insight, said: “The big driver of the CfD capacity this year is offshore wind. In fact, forecasts indicate that over next winter, monthly generation from the CfD fleet could total between 2.5TWh and 3.0TWh.
“Whilst this is still only around 10% of monthly demand levels for the winter months, the variable nature of wind generation is increasingly impacting the market over these periods.”