United Kingdom

United Kingdom

UK to scrutinise offshore wind sector deals

UK: The business and energy parliamentary committee has launched an inquiry into the role of sector deals within the UK's industrial strategy for offshore wind and construction.

Three projects contracted in the second CfD auction will surpass the London Array (above) as the UK's largest offshore wind farm
Three projects contracted in the second CfD auction will surpass the London Array (above) as the UK's largest offshore wind farm

It will be the committee’s first inquiry since last month’s publication of the government’s industrial strategy.

The committee will scrutinise bespoke sector arrangements outlined by the UK government’s Business, Energy and Industrial Strategy department (BEIS) — a proposed solution to the absence of new low-carbon electricity levies until 2025 — as well as the government’s approach to raising industry productivity.

It is also welcoming stakeholders’ views on what the arrangements need to look like and has called for the submission of written evidence on how clearly the government has set its criteria.

From the construction and offshore wind sectors in particular, it wants to know how the government has engaged with them to secure industry-wide deals and what else it should be expected to develop.

The committee also wants to know what other measures, other than investment, BEIS should develop.

This year, offshore wind dominated the government’s second contracts for difference (CfD) auction, with two projects securing deals half the average price of the UK’s first CfD tender in February 2015.

BEIS has confirmed up to £557 million (€622.95 million) would be available for tenders by 2020 under the levy control framework (LCF), with the next CfD auction to be held in spring 2019.

But the LCF — which manages spending on CfDs, feed-in tariffs for small-scale renewables and the closed renewables obligation scheme — is set to be scrapped, chancellor Philip Hammond announced in March.

In November, Hammond reaffirmed it would be replaced with a new set of controls to cap consumer bills, something highlighted in leading economist Dieter Helm’s review of the UK energy system.

But under the current plans, no new low-carbon electricity levies will be created beyond 2020, and possibly until 2025 — by which time the "burden of such costs" are expected to have fallen.

Sector deals specific to individual industries could be one method of circumnavigating this issue.

This article was originally published on The Ends Report.

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