UK Ministers of Parliament debated the effect of the Contracts for Difference (CfD) allocation process on offshore wind developments in one of five Westminster Hall debates this morning (January 6).
The majority of MPs have stressed the industry’s positive overall impact on employment, local and national economy and energy mix as a major reason to support offshore wind energy. On the other side, Mr Christopher Chope, Conservative MP for Christchurch, argued that offshore wind is a costly source of energy that requires taxpayers’ money to build something that other countries are not so eager to build.
The focus has been set on short- and long-term plans of the UK Government, which affect the cost-efficiency of future offshore wind projects by providing certainty for developers.
Mr Mike Weir, Scottish National MP for Angus, who moved the debate, emphasized the importance of investing in offshore wind as an industrial development and creating more clarity on post-2020 targets to allow for greater policy stability. He quoted a part of Green Alliance’s report, saying that Contracts for Difference form part of a strong new investment framework for offshore wind, but the lack of clarity over post-2020 policy in funding is contributing to rapid shrinking of the offshore wind project pipeline.
Subsidizing offshore wind farms raised a discussion over financial viability of offshore wind developments compared to those of nuclear power, which are cheaper and do not increase consumers’ bills significantly.
Mr Chope called offshore wind supporters “subsidy junkies” and said that these subsidies will burden the national budget. He mentioned wave and tidal energy industries as those that could be a good area to invest, as the UK can be the world leader in the emerging industry, rather than investing in offshore wind technology, in which the country already has foreign competitors.
Furthermore, it has been said that the allocation process needs to reflect the Government’s ambition for offshore wind capacity, although new technology requires more funds than the mature one. However, the UK holds a strong top-position in the offshore wind industry and some of the MPs forecast that it will bring the same economical prosperity as the oil and gas industry has brought.
The CfD award notification is scheduled to take place on March 18. Some of the projects will not win the contracts in this round, but could be found eligible in the next one. In the light of reducing costs, CfDs are a way to set a competitive process that will enable the country to award the contracts to developers which bid the lowest.
Offshore WIND Staff; Image: Scira (Illustration)