On 11 September 2017 at 7AM, the Department for Business, Energy & Industrial Strategy published the outcome of the second Contracts for Difference (CFD) allocation round. And, it’s a bullish sign for the future of UK renewables.
What is a CFD?
A Contract for Difference (CFD) is a private law contract between a low carbon electricity generator and the Low Carbon Contracts Company (LCCC). An LCCC is a government-owned company, introduced as part of the Electricity Market Reform (EMR) programme. This method gives greater certainty and stability of revenues to electricity generators. In turn, it reduces exposure to volatile wholesale prices. Consumers are also protected from paying for higher support costs when electricity prices are high.
Offshore wind contracts
Three offshore wind projects have secured 15-year contracts
- 1,386-MW Hornsea Project 2 of Dong Energy A/S (CPH:DENERG)
- 950-MW Moray Offshore Windfarm (East), a partnership between EDP Renovaveis SA (ELI:EDPR) and Engie SA (EPA:ENGI)
- 860-MW Triton Knoll Offshore Wind Farm, a joint venture between Innogy Renewables UK Ltd and Statkraft.
There were also contracts awarded to other energy generation technologies, totalling around 150MW.
The outstanding reduction in the cost of offshore wind is great news for the industry. The UK government pointed out that offshore wind costs have dropped by 50% from its first auction in 2015. Now we can add “cost effective” to the growing list of positives for the renewable energy industry. The results show renewables are now the most cost-effective form of any energy generation. This is helping to secure a low carbon future, and providing new sustainable jobs in the UK.
What does it mean for Taylor Hopkinson?
The industry is driving jobs and the supply chain is growing across the UK. Taylor Hopkinson are proud to be playing such an important part of this growth. Thousands of new jobs in UK businesses will be created by the projects announced – great news.
As a recruitment company, we play an important role in reducing costs and finding cost-effective solutions for our clients. This doesn’t only relate to the day rate costs and salaries, it’s our responsibility to consistently review hiring strategies. We are on top of new technologies and new innovation relating to the recruitment process.
We are a global recruitment company, but born of Scotland so it’s great to see the Moray Firth project secure a winning bid. Scotland’s largest offshore wind farm powering close to a million homes. THA look forward to supplying personnel to this project.
To continue to see costs reduce, we are hoping to see a clear pipeline of projects well into the 2020s announced. We will also be keeping our eyes on the government’s forthcoming clean growth strategy. The Government can help us by continuing to hold competitive auctions for future projects, as it has promised. There is also a need to put Renewables at the heart of its upcoming Industrial Strategy.