Commenting on the publication by the government of the rise in Administrative Strike Prices (ASPs) for the Contract for Difference Allocation Round 6:
Tim Dixon, Senior Consultant, at Cornwall Insight:
“The government’s decision to boost strike prices ahead of next year’s renewables auction is a significant enhancement that will be welcomed by renewables developers, signalling a much-needed shift in policy that acknowledges the harsh realities developers face in today’s challenging economic landscape.
“With offshore wind ASPs jumping from £44 to £73 per MWh, along with price increases for other renewable technologies, the stage may now be set for a more competitive auction. The rise in prices will see a greater number of eligible renewable projects able to compete and depending on the budget parameters1, may secure significantly more capacity to help meet the UK’s renewable targets.
“However, we must not get ahead of ourselves, the decision to separate offshore wind into its own pot will reduce competition between it and other established renewable technologies. While this is supportive for offshore wind and could stimulate investment, setting appropriate budgets will now be essential to ensuring continued competition, supporting enough capacity across a range of technologies, and delivering good value for consumers.
“Further, we know that beyond strike prices, barriers such as supply chain issues persist alongside continued macroeconomic issues, affecting the viability of renewable technologies. The government’s consultation on non-price factors acknowledges these concerns to some extent, but the road to a sustainable energy future is undeniably complex.
“There are strong headwinds facing the renewable sector, and while these announcements are a positive step, the government has some very ambitious targets which leave very little room for error.”
Reference:
- The budget parameters are due to be set next March
- Ends
Notes to Editors
For more information, please contact: Verity Sinclair at v.sinclair@cornwall-insight.com
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