Government hails ‘biggest investment in a generation’ in tidal stream power, as it ramps up total renewables funding to £285m in upcoming auction round
The government is to invest £20m a year in tidal stream power projects through its flagship renewable energy auction scheme, in a major vote of confidence in the UK’s fledgling marine energy sector.
Ministers today confirmed that as part of the fourth allocation round of the Contracts for Difference (CfD) scheme, which is due to open next month, £20m a year will be ringfenced for use by tidal stream power projects, in a move that has long been called for by the marine energy sector.
The government described the £20m funding as “the biggest investment in a generation” in tidal power, predicting the move would boost jobs in coastal communities while also helping drive down the cost of a technology that could provide reliable, clean electricity in support of the UK’s climate targets.
The funding comes on top of that already set aside for other forms of renewables in the upcoming allocation round, bringing the total amount in the auction to £285m per year, according to the Department for Business, Energy and Industrial Strategy (BEIS).
Ringfencing funding support for tidal power will give the marine energy sector a chance to develop its technology and lower costs in a similar way to the UK’s offshore wind industry, which has achieved rapid reductions in development and technology costs through the CfD scheme.
Between the first allocation round of the CfD in 2015 and the most recent round in 2019, the price per unit of offshore wind power fell by around 65 per cent, illustrating the effectiveness of the scheme’s design in keeping costs down, BEIS said.
The government had previously said tidal stream projects could compete for contracts through the upcoming CfD auction, but the industry feared that its relative immaturity meant projects would struggle to compete on cost with large scale offshore wind projects and as such had been lobbying for funding to be ringfenced for a dedicated auction that would only be open to tidal stream developers.
The government appears to have now accepted the industry’s argument that tidal energy has the potential to deliver significant future cost reductions and play a key role in the development of a zero emission grid, if the sector is provided with dedicated support. Tidal energy also has the added bonus of offering a near constant, reliable source of low carbon power generation thanks to the clockwork predictability of the tides, unlike more intermittent wind and solar power which rely on the wind and sun respectively.
As such, the government believes adding tidal energy to the UK’s energy mix can help the grid match clean power supply with demand, while also helping to reduce reliance on fossil fuels and limit “exposure to volatile global gas prices” that are currently plaguing the global economy.
“As an island nation we are perfectly placed to capitalise on clean marine energy, building on our booming offshore wind sector which is now a British industrial success story,” said Business Secretary Kwasi Kwarteng. “We hope to see marine energy follow in the successful footprints of other renewable technologies, where we’ve seen costs fall dramatically in recent years thanks to UK government support. The investment today provides a major push for tidal power to become a key part of the next generation of renewable electricity projects needed to strengthen energy security as we work to reduce our dependency on volatile fossil fuels.”
Full details of the rules governing the upcoming £285m CfD allocation round are set to be announced tomorrow, before the auction opens on 13 December. In total, the government is aiming to support up to 12GW of low carbon electricity capacity from the auction – a level that is higher than the amount of capacity secured through the last three CfD rounds put together.
Clean energy groups have long been calling for dedicated funding for tidal power within the government’s renewables auctions – or a ‘pot within a pot’ – arguing the technology otherwise risks being outcompeted by other, currently cheaper, forms of generation in the auctions.
As a result, marine energy industry figures argued the sector would struggle to secure the investment needed to deliver cost reductions and innovation, and that the additional renewables capacity needed to meet UK climate goals would be in danger of not being delivered.
Dan McGrail, CEO of trade association RenewableUK, therefore welcomed today’s announcement as “a major step forward for the UK’s world-leading tidal energy industry”, which he said would accelerate innovation and cost reductions in the sector.
“Ring-fenced funding for tidal stream doesn’t just unlock private investment and secure green jobs today – it also puts us in pole position to capitalise on exports to the global market in due course,” he said. “That’s why we’ve been calling for this dedicated pot of funding for tidal power. We need a range of renewable technologies to get us to net zero as fast as possible. As an island nation with superb tidal energy resources to harness, it’s clear that tidal stream should have a key role to play in our shift to clean energy.”
