Contracts for Difference:  Onshore Wind And Solar Development

On 24th November 2020, the UK Government published its response to its consultation on proposed changes to the Contracts for Difference (CfD) scheme ahead of a competitive auction (the fourth allocation round (AR4)), which is scheduled to be held towards the end of 2021.  This auction could support up to 12GW of renewable energy.

For the first time since 2015, the Government has included for both solar projects and onshore wind.

The UK Department for Business, Energy & Industrial Strategy (BEIS) has stated in the initial consultation that the 2021 allocation round will include auctions for:

  • Pot 1: ‘established’ technologies, including onshore wind (greater than 5MW) and solar photovoltaic (PV) (also greater than 5MW);
  • Pot 2: ‘less-established’ technologies, such as floating offshore windfarms, energy-from-waste plants and tidal stream project and
  • Pot 3: offshore wind.

Does this make things easier for onshore wind development? Josh Taylor (Womble Bond Dickinson) comments:  ‘Whilst the consultation and proposals were mainly focused on changes to the Contracts for Difference (CfD) regime, the proposals to update the 2014 Community Benefits and Engagement Guidance for Onshore Wind is likely to be a good thing for locals and communities as well as provide more clarity for developers on the range of community benefit options available. What continues to be a common theme is the need for onshore wind to keep the community at the forefront – in particular for the consultation process as well as for any community benefit offering. What is, however, not yet clear is whether any wider policy changes will be made off the back of these (and the net zero) proposals to, for example, amend or relax the criteria within the 2015 Written Ministerial Statement (HCWS42)*1′

Refer to our Onshore Wind article for a case study of a recent successful community wind turbine scheme.

The new auction is intended to build on the prime minister’s 10-point climate plan (https://www.gov.uk/government/publications/the-ten-point-plan-for-a-green-industrial-revolution) to help the UK to meet is climate change obligations and move the UK towards its goal of ending its contribution to rising global carbon emissions by 2050.

*1  The 2015 Written Ministerial Statement (HCWS42) imposed two pre-conditions for onshore wind:

a)         The proposed area should be identified as ‘suitable for wind energy development’ in the Local Plan or Neighbourhood Plan; and

b)         following consultation, identified impacts on local communities should be fully addressed and the proposals should have the backing of the local community.