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United Kingdom

CfD delays criticised by MPs

UK: Delays to the government's contracts for difference (CfD) process is causing uncertainty in the sector and "deterring" investors, UK members of parliament have said.

MPs debated the effect of the CfD allocation process on offshore wind developments
MPs debated the effect of the CfD allocation process on offshore wind developments

During a parliamentary debate Conservative MP Peter Aldous expressed concerns for the future of the UK's offshore wind sector beyond 2020.

"There is a need to articulate a long-term vision for the industry beyond 2020. At the moment the industry does view 2020 as a budgetary cliff edge," Aldous said.

He called on the Department of Energy and Climate Change to end policy uncertainty by publishing as soon as possible both the timing and budgets for the 2015 and 2016 CfD allocation rounds.

He added a three-month delay to the 2014 CfD allocation round was "unhelpful" and called for it to be completed quickly. Results are not expected until mid-March due to an appeal being made to UK energy regulator Ofgem.

He also said the £235 million (€299 million) budget for offshore wind had been set too low, surprising investors and sending "very much the wrong signals out to the market".

Scottish National Party MP and energy spokesperson Mike Weir said uncertain CfD budgets could actually increase offshore wind costs.

"The government is giving no market signals on what the [CfD] budgets are likely to be in future allocation rounds. Without the confidence that budgets will be available, it is impossible for [developers] to assess the allocation risk and this will act as a real deterrent to investors.

"Greater policy stability could result in capital investment worth in the region of £1.8 billion (€2.3 billion) a year between 2015 and 2030 into the UK wind supply chain," said Weir.

Speaking on behalf of the government, Conservative MP Ben Wallace said the funding needs to be stretched across a number of years to avoid a "boom and bust investment cycle". He added funding is capped under the levy control framework, which protects consumers against bill price rises.

Wallace said up to £1 billion (€1.28 billion) could still be invested in to renewable energies up to 2020 under the framework.

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