DESNZ issues Contracts for Difference seventh allocation round: comment
Comment on DESNZ issuing Contracts for Difference seventh allocation round
By Dr Simon Cran-McGreehin
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Commenting on news that the Department for Energy Security and Net Zero (DESNZ) has issued the Contracts for Difference seventh allocation round (AR7) [1], Dr Simon Cran-McGreehin, Head of Analysis at the Energy and Climate Intelligence Unit (ECIU) said:
"The auction hasn’t happened so we don’t know yet where the price will settle. CfD renewables provide a fixed price which helps to insulate against the extreme swings in prices we’ve seen in the UK over the past few years that have driven up energy bills for families and industry alike. As more British renewables are built gas, which would have to come from abroad as the North Sea continues to decline, will be squeezed off the system so it can’t set the price as often. Some industry experts think that AR7 will need to secure at least 8.4GW of offshore wind if we're to stay on track for clean power by 2030 [2] - this extra UK power generation would reduce our gas imports by 90TWh a year, [3] over three times as much as any new licences for gas drilling in the North Sea." [4]
ENDS
Notes to editors:
1. https://www.gov.uk/government/collections/contracts-for-difference-cfd-allocation-round-7
2. OEUK recent estimates: https://oeuk.org.uk/oeuk-next-offshore-wind-allocation-round-must-raise-8-4-gw-to-move-uk-closer-to-clean-power-2030-goals/
3. Estimated gas avoided by new offshore wind farms assumes offshore wind load factor of c.60% and gas power generation efficiency of c.50%.
4. NSTA projects c.25TWh/yr of extra gas production around 2031 from potential new drilling, but this would then decline thereafter. https://www.nstauthority.co.uk/data-and-insights/insights-and-analysis/production-and-expenditure-projections/
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George Smeeton, Head of Communications, ECIU, Tel: 07894 571 153, email: george.smeeton@eciu.net