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Contracts for Difference renewables scheme boosted by £22m Government funding

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Energy Security Secretary Grant Shapps has today announced a £22 million increase in the Contracts for Difference (CfD) scheme, in a move designed to boost the deployment of renewables across the country. 

The scheme – launched in 2014 – is the Government’s main system for supporting low-carbon electricity generation and has already led to an increase in the proportion of the UK’s energy coming from renewables. This latest funding injection takes the total budget to £227 million for the next auction, expected to open in March 2024.

Renewables provided around 42% of the UK’s electricity generation in 2022, compared to around 21 per cent in the US and 23 per cent in Japan. In the first quarter of 2023, renewables generated a record 48 per cent of our electricity.

The hope from Government is that the increased funding, combined with the introduction of annual auctions this year, will boost investments in Britain’s renewables sector, in line with its’ target for a fully decarbonised power sector by 2035, while strengthening the UK’s energy security, fostering growth in the country’s green industries and reducing exposure to volatile global gas prices.

Energy Security Secretary Grant Shapps said:

“Putin’s barbaric action against Ukraine made clear our need to do whatever it takes to bolster our energy security.

“Today’s funding through our flagship Contracts for Difference scheme – the lifeblood of our renewables industry for nearly a decade – will help grow our economy by making Britain the first choice for investors in renewable energy projects and secure skilled jobs for future generations.

“This will be the case for established technologies like solar, and new innovations like floating offshore wind and, alongside our backing for oil and gas, carbon capture and our revival in nuclear, will ensure we can help power more of Britain from Britain for decades to come.”

While the funding is certainly welcomed by the sector, critics have expressed concerns that it “falls far short” of what is needed if we’re to transition to a clean energy society in line with the Net Zero target.

Andrew MacNish Porter, Policy Manager at Scottish Renewables, said:

“The UK Government calls the Contracts for Difference mechanism ‘the lifeblood of our renewables industry’, and while today’s announcement of a budget increase is welcome it still falls far short of what’s needed to ensure the heart of this vital part of the UK’s economy keeps pumping.

“While the sums mentioned may seem large, they are simply not enough to unlock the £50-60 billion capital investment which will be required each year to deliver on the UK’s net zero ambitions through the late 2020s and 2030s and the £1.1 trillion which the Office for Budget Responsibility projects the UK will save by 2050 if it reaches net-zero.

“Going forward, the UK Government must ensure it properly funds the Contracts for Difference mechanism to maximise the deployment of the low-cost, home-grown renewable energy projects we need to end our reliance on expensive imported gas and tackle climate change.”

In a week of ‘ups and downs’ for both the clean energy sector and the environment as a whole; a meeting was also held in Downing Street on Monday between Mr Shapps and a range of energy companies, including  EDF, SSE, Shell and BP, to discuss plans to collectively invest more than £100bn over the next decade in low and zero-carbon projects and related infrastructure. Today’s announcement also follows The Prime Minister’s pledge to extract as much oil and gas from the North Sea as possible in a move that seems completely at odds with the UK’s climate change commitments and that has been widely criticised by renewables and environmental groups alike.


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