The Anonymous Widower

UK Confirms £205 Million Budget To Power More Of Britain From Britain

The title of this post, is the same as that of this press release from the Department of Energy Security And NetZero.

This is the sub title.

UK government confirms budget for this year’s Contracts for Difference scheme as it enters its first annual auction, boosting energy security.

These are the three bullet points.

• Government announces significant financial backing for first annual flagship renewables auction, boosting Britain’s energy security
• £170 million pledged for established technologies to ensure Britain remains a front runner in renewables and £10 million ring-fenced budget for tidal
• Scheme will bolster investment into the sector every year, delivering clean, homegrown energy as well as green growth and jobs

These are my thoughts.

First And Annual

The scheme is flagged as both first and annual!

Does this mean, that each Budget will bring forward a pot of money for renewables every year?

My father, who being a letterpress printer and a Cockney poet would say it did and I’ll follow his lead.

Two Pots

In Contracts for Difference Round 4, there were three pots.

• Pot 1 – Onshore Wind and Solar
• Pot 2 – Floating Offshore Wind, Remote Island Wind and Tidal Stream
• Pot 3 – Fixed Foundation Offshore Wind

This document on the government web site lists all the results.

For Contracts for Difference Round 5, there will be two pots, which is described in this paragraph of the press release.

Arranged across 2 ‘pots’, this year’s fifth Allocation Round (AR5) includes an allocation of £170 million to Pot 1 for established technologies, which for the first time includes offshore wind and remote island wind – and confirms an allocation of £35 million for Pot 2 which covers emerging technologies such as geothermal and floating offshore wind, as well as a £10 million ring-fenced budget available for tidal stream technologies.

It could be described as a two-pot structure with a smaller ring-fenced pot for tidal stream technologies.

Contract for Difference

There is a Wikipedia entry for Contract for Difference and I’m putting in an extract, which describes how they work with renewable electricity generation.

To support new low carbon electricity generation in the United Kingdom, both nuclear and renewable, contracts for difference were introduced by the Energy Act 2013, progressively replacing the previous Renewables Obligation scheme. A House of Commons Library report explained the scheme as:

Contracts for Difference (CfD) are a system of reverse auctions intended to give investors the confidence and certainty they need to invest in low carbon electricity generation. CfDs have also been agreed on a bilateral basis, such as the agreement struck for the Hinkley Point C nuclear plant.

CfDs work by fixing the prices received by low carbon generation, reducing the risks they face, and ensuring that eligible technology receives a price for generated power that supports investment. CfDs also reduce costs by fixing the price consumers pay for low carbon electricity. This requires generators to pay money back when wholesale electricity prices are higher than the strike price, and provides financial support when the wholesale electricity prices are lower.

The costs of the CfD scheme are funded by a statutory levy on all UK-based licensed electricity suppliers (known as the ‘Supplier Obligation’), which is passed on to consumers.

In some countries, such as Turkey, the price may be fixed by the government rather than an auction.

Note.

1. I would trust the House of Commons Library to write up CfDs properly.
2. As a Control Engineer, I find a CfD an interesting idea.
3. If a generator has more electricity than expected, they will make more money than they expected. So this should drop the wholesale price, so they would get less. Get the parameters right and the generator and the electricity distributor would probably end up in a stable equilibrium. This should be fairly close to the strike price.

I would expect in Turkey with Erdogan as President, there are also other factors involved.

Renewable Generation With Energy Storage

I do wonder, if wind, solar or tidal energy, is paired with energy storage, this would allow optimisation of the system around the Contract for Difference.

If it did, it would probably mean that the generator settled into a state of equilibrium, where it supplied a constant amount of electricity.

Remote Island Wind

Remote Island Wind was introduced in Round 4 and I wrote about it in The Concept Of Remote Island Wind.

This was my conclusion in that post.

I must admit that I like the concept. Especially, when like some of the schemes, when it is linked to community involvement and improvement.

Only time will tell, if the concept of Remote Island Wind works well.

There are possibilities, although England and Wales compared to Scotland and Ireland, would appear to be short of islands.

This map shows the islands of the Thames Estuary.

Note.

1. In Kent, there is the Isle of Sheppey and the Isle of Grain.
2. Between the two islands is a large gas terminal , a gas-fired power station and an electricity sub-station connecting to Germany.
3. In Essex, there is Canvey, Foulness and Potton Islands.
4. There is also the site at Bradwell, where there used to be a nuclear power station.

If we assume that each island could support 200 MW, there could be a GW of onshore wind for London and perhaps a couple of SMRs to add another GW.

This map shows the islands around Portsmouth.

Note.

1. Hayling Island is to the East of Portsmouth.
2. Further East is Thorney Island with an airfield.

The Isle of Wight could be the sort of island, that wouldn’t welcome wind farms, although they do make the blades for turbines. Perhaps they should have a wind farm to make the blades even more green.

But going round England and Wales there doesn’t seem to be many suitable places for Remote Island Wind.

I do think though, that Scotland could make up the difference.

Geothermal Energy

This is directly mentioned as going into the emerging technologies pot, which is numbered 2.

I think we could see a surprise here, as how many commentators predicted that geothermal heat from the London Underground could be used to heat buildings in Islington, as I wrote about in ‘World-First’ As Bunhill 2 Launches Using Tube Heat To Warm 1,350 Homes.

Perhaps, Charlotte Adams and her team at Durham University, will capitalise on some of their work with a abandoned coal mine, that I wrote about in Exciting Renewable Energy Project for Spennymoor.

Timescale

This paragraph gives the timescale.

The publication of these notices mean that AR5 is set to open to applications on 30 March with results to be announced in late summer/early autumn 2023, with the goal of building upon the already paramount success of the scheme.

It does look like the Government intends this round to progress at a fast pace.

Conclusion

If this is going to be an annual auction, this could turn out to be a big spur to the development of renewable energy.

Supposing you have a really off-beat idea to generate electricity and the idea place in the world is off the coast of Anglesey.

You will certainly be able to make a bid and know like Eurovision, one auction will come along each year.

 

 

 

March 16, 2023 - Posted by AnonW | Energy | Contracts for Difference, Contracts for Difference Allocation Round 4, Contracts for Difference Allocation Round 5, Control Engineering, Essex, isle Of Grain, Isle Of Sheppey, Isle Of Wight, Kent, My Father, Offshore Wind Power, Remote Island Wind, River Thames, Tidal Power, Wind Power