The past week has seen both good news and bad news when it comes to the UK’s clean energy future. Starting with the bad, Ørsted made the announcement that it will not be moving forward with the 2.4GW Hornsea 4 offshore wind project in its current form.
Why? The reasoning given is “several adverse developments”. These include a continued increase in supply chain costs, higher interest rates, and an increase in the risk to construct and operate Hornsea 4 on the planned timeline for a project of its scale. It is not entirely dead and buried, however, with Ørsted claiming it will evaluate options for future development of the project given continuing seabed rights, grid connection agreement and Development Consent Order. It will just not be delivered under the CfD awarded in AR6.
The good news, in contrast, is the government declaring the budget for the Clean Industry Bonus (CIB) under AR7 to be £20.1 million per GW of capacity. This means a substantial £544 million budget is on offer as it looks to incentivise in domestic clean energy manufacturing and highly skilled jobs in industrial towns and cities.
Greater clarity has also been offered on how the UK’s key clean energy investment schemes could look in the future with the government publishing its initial response to a consultation on changes to the Contracts for Difference (CfD) scheme. In this, it confirmed the Contract Budget Notice will now be published later in the allocation round process, regulations will be amended to enable the Secretary of State to request anonymised bid information from the delivery body in an effort to more effective balance capacity procured and consumer bill costs when setting the budget, and no longer allow flexible bids for fixed-bottom offshore wind applications.
A further, final response will be published before AR7 opens, with the elements covered in this initial one those that require legislation.
It also published a response to a consultation on changes to the Capacity Market (CM) aimed at maintaining security of supply and enabling flexible capacity to decarbonise. This now means the capital expenditure threshold for refurbishing three-year CM agreements will be lowered to £65/kW for Capacity Market Units prequalifying in 2025 to support to economic case for investment to extend the life of ageing plants.
It will also ensure all substantially refurbished or new combustion power plants participating in the 2026 T-4 CM auction for the 2029-30 delivery year will have to commit to having a credible decarbonisation plan in place, either through converting to H2P or to power CCUS, while an exit pathway will be introduced to enable the decarbonisation of unabated gas by allowing multi-year CM agreement holders to leave without penalty and transfer to a Dispatchable Power Agreement. This will enable conversion o power CCUS.
Also in the news:
UK and Norway target clean energy opportunities: The UK and Norway have agreed a new Green Industrial Partnership that will help support clean energy investment in the North Sea, including in green hydrogen and offshore wind, while unleashing clean energy job opportunities.
New Marine Energy Taskforce announced: Energy Minister, Michael Shanks, has announced the formation of a new industry-led Marine Energy Taskforce to unlock the UK’s full potential in tidal and wave technologies at a keynote speech at the Marine Energy Wales conference.
Government looks to install solar panels on car parks: A call for evidence has been launched to understand how to exploit the “untapped potential” of solar in car parks across England, Wales and Northern Ireland.
National Wealth Fund backs grid upgrades: The National Wealth Fund (NWF) has announced a £600 million commitment as part of a wider £1.35 billion package that will help Iberdrola strengthen the resilience of the UK’s transmission network through ScottishPower.
Energy UK calls for closer energy links with EU: Ahead of a summit meeting between the Prime Minister and EU President, Ursula von der Leyen, Energy UK has called for the UK and EU to commit to linking their carbon pricing schemes and enhancing energy cooperation.
Wales backs tidal with multi-million investment: The Welsh Government has signalled its commitment to making Wales a world centre of emerging tidal technologies after investing £2 million into Inyanga Marine Energy Group to help test improved tidal turbines in real sea conditions at the Morlais tidal energy site off Yns Mon.
OEUK urges different path after job losses: Offshore Energies UK (OEUK) has told the government to pursue “another path” where its policies “make the most of domestic oil and gas rather than imports as we build out renewables” after Harbour Energy cut a further 250 jobs.
Three in five UK businesses have energy cost concern: 62% of UK businesses state rising and unstable energy costs are impacting their profitability and competitiveness, while two-thirds (66%) are concerned about the availability and reliability of energy supply in future, according to new research from EY.
Ofgem secures compensation for customers: Ten suppliers have been made to pay over 34,000 customers a collective £7 million in compensation and refunds after an Ofgem compliance review uncovered they had been overcharging them in error.
First Monopile installed at East Anglia THREE: ScottishPower has announced the commencement of its offshore construction programme for its biggest-ever renewables project, with the first foundation installed for the £4 billion East Anglia THREE offshore wind farm.
