The UK Department for Energy Security and Net Zero (DESNZ) is looking to reform its Contracts for Difference (CfD) scheme, which offers a guaranteed price for low-carbon electricity generation. The proposed changes would reward renewable energy generators for their efforts to upskill workers in their supply chains and support the development of the wider industry.
Since 2014, a long-term contract with the government has been offered to renewable electricity generators through the CfD auction scheme. It ensures that their electricity will cost a certain minimum amount while also protecting consumers from excessive expenses by establishing a maximum amount.
The changes could see a greater emphasis placed on the social value of renewable energy projects, with generators being assessed on their ability to create jobs and improve the skills of local workers. The government is also considering the introduction of a separate pot of funding for upskilling initiatives, which would be available to both new and existing projects.
The move has been welcomed by renewable energy developers, who say that it will help to create a more sustainable industry in the long term.
Energy UK’s deputy director for advocacy Adam Berman said, “If designed appropriately, the inclusion of new factors in the CfD could improve investment certainty for low carbon projects, boosting energy security as well as ensuring that all parts of the UK benefit from the jobs, skills, and supply chain opportunities these multi-billion-pound investments bring.”
The CfD scheme has been a major driver of renewable energy deployment in the UK, providing developers with the certainty they need to invest in new projects. However, critics have argued that it has not done enough to support the wider industry and to create jobs and skills in local communities.
The proposed changes are part of the government’s wider plan to reach net-zero emissions by 2050. The UK has set a target of generating 40GW of offshore wind power by 2030, as well as investing in other low-carbon technologies such as hydrogen and carbon capture and storage. The CfD scheme is seen as a key tool in achieving these targets, providing developers with the financial support they need to build new projects and bring down the cost of renewable energy.
