Further investments of approximately £40 billion are expected for renewable generation projects leading up to 2020, following updated contract terms and strike prices published today alongside wider reforms to the electricity market.
Today, sixteen renewable generation projects have reached the next stage of the Final Investment Decision Enabling for Renewables (FIDeR) process, which could be supported either through investment contracts or the enduring Contracts for Difference (CfD) regime.
At the moment there is over 20GW of renewable capacity operating in the UK, with a total of nearly 11GW of offshore and onshore wind currently with planning consent and awaiting construction. Additionally, if all 8GW of projects proceeding under FIDeR are built through investment contracts or under the CfD regime, this could contribute to roughly 30% of new renewable generation needed by 2020.
The updated contract terms and strike prices will support the build of a low-carbon energy mix to keep lights on, reduce emissions and bring green jobs and growth to the UK. Additionally, the further investment will generate enough clean power for 10 million homes, and reduce carbon dioxide emissions by over 20 million tonnes. Increasing the amount of home-grown renewable energy will boost energy security, reduce reliance on imported fossil fuels, and support up to 200,000 jobs by 2020.
Overall, these reforms will help support up to £110 billion of additional investment across the electricity sector by 2020, helping to insulate Britain from future world gas price increases and boosting jobs and growth in every region of the UK.
Energy and Climate Change Secretary Edward Davey said:
"This package will deliver record levels of investment in green energy by 2020. Our reforms are succeeding in attracting investors from around the world so Britain can replace our ageing power station and keep the lights on.
"Investors are queuing up to express their interest in these contracts. This shows that we are providing the certainty they need, our reforms are working and we are delivering ahead of schedule and to plan.
"With sixteen new major renewable projects progressing in our "go early" stage we are delivering ahead of schedule and are able to begin the move to the world's first low carbon electricity market faster than expected."
The contracts and strike prices give energy generators a sustainable and long-term basis to invest in renewable energy, reinforcing the UK's position as one of the world's leading renewables markets, and the number one place for business to invest in offshore wind generation.
Given the approach set out in the recent European Commission guidance, it is expected that the new state aid guidelines will require the UK to move to competition for more established technologies. The Government will confirm its approach and details of how this will operate through the Delivery Plan and engagement with stakeholders early in 2014.
The contracts will be delivered from within the Levy Control Framework, and is consistent with the plans announced this week reducing the average household bill by £50 a year by early 2014.