The UK government has announced the allocation of a fund of £265 million to be auctioned off in December, in what they are calling their ‘biggest renewable energy support scheme’ yet.
Renewable energy developers will compete for the funds in a reverse auction, where the lowest-cost projects will secure contracts that guarantee the price for the renewable electricity they generate.
£200 million of that fund will be apportioned to offshore wind developers, a further £55 million to emerging renewable technologies such as tidal power, and £24 million of that will be set aside for floating offshore wind projects. £10 million will also be made available to onshore and wind and solar projects to provide 5GW of renewable energy capacity.
According to Dan McGrail, chief executive of trade organisation Renewable UK, the scheme could precipitate private investment of over £20 billion, creating a boost to jobs and the UK supply chain, as well as reducing energy bills.
In the last auction the cost of offshore wind fell by a third to record lows of around £40 per MW hour. Well below the wholesale energy market price of electricity, this meant households were unlikely to face higher charges on their energy bills.
Energy minister, Anne-Marie Trevelyan, said of the updates to the new scheme:
“The new plans set out today deliver on the Prime Minister’s Ten Point Plan and will support the next generation of renewable electricity projects needed to power our homes and meet our world-leading climate change targets.”
It has been almost a year since prime minister Boris Johnson set out this ‘10 point plan’ to support 40GW of offshore wind farms by 2030 as part of the government’s plan to ‘build back greener’ from Covid-19. This plan included funding for low carbon hydrogen and millions of electric vehicles, as well as plans to replace gas boilers by installing up to 600,000 electric heat pumps a year by 2028.
However, according to a recent analysis of industry data by Greenpeace, it seems that in comparison to other countries in Europe the UK is ‘seriously lagging’ in its efforts.
The UK housing stock is responsible for around 14% of the country’s total greenhouse gas emissions. As this is mostly due to reliance on gas heating and poorly insulated homes, heat pumps are considered a significant tool in cutting carbon emissions.
If the UK wants “a proper chance of catching up,” to make the cost of installing a heat pump and upgrading energy efficiency the same as replacing a gas boiler, it will need “a proper strategy and enough cash,” says Greenpeace UK’s policy director Doug Parr.
A government spokesman has stated that the strategy paper will outline the government’s plans to help the upfront costs of heat pumps to fall in the coming years, prioritising “fairness and affordability for both households and taxpayers at the heart of our plans.”
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