UK’s Spring Budget 2024: Record Budget for Renewables

The UK Government have announced a record budget over £1 billion for renewable energy projects in the upcoming Contracts for Difference.

Figure 1: UK Houses of Parliament.

Contracts for Difference 

The record-breaking budget contributes towards the sixth Contracts for Difference (CfD) allocation round, which follows on from the last auction (2023) which had a budget of £227 million. The 2023 auction failed to attract any bids for offshore wind project contracts.

The CfD scheme provides an incentive investment to reduce potential project risks. Further information on the CfD scheme can be found via the Pager Power website [1]. 

Budget Breakdown

Offshore wind projects have been allocated a record £800m fund, approximately 3.5 times more than the previous round. The increase in fund aims to ensure Britain remains a leader in this field, as it is home to five of the world’s largest offshore wind developments [2]. 

An extra £120m will back the UK’s Green Industries Growth Accelerator (GIGA), a fund that supports the expansion of renewable energy across the UK. A further £105m contributes towards emerging technologies such as onshore wind and solar developments. 

Continued Growth 

The CfD allocation aims to keep the UK on track to deliver the UK’s ambition of up to 50GW of offshore wind by 2030, including up to 5GW of floating offshore wind. 

Claire Coutinho of Energy Security Secretary has said:

‘When it comes to renewables, we have a record to be proud of. In 2010, just 7% of our electricity came from renewables, this is now up to over 40% today.’

‘We have the second largest renewables capacity in Europe, which is backed by £300 billion of investment since 2010, with £24 billion since September alone.’

Energy Profits Levy (EPL)

The budget also affected the Windfall Tax (i.e. EPL) on North Sea oil and gas producers [3]. The windfall tax: a levy imposed on companies that have benefited from something they were not responsible for [4]. 

The EPL was intended to be phased out as a result of oil and gas prices dropping to ‘normal’ levels, but has now been extended by a year, taking its effect until March 2029.

Pager Power and Renewable Energy Projects

Pager Power undertakes technical assessments for developers of renewable energy projects and tall buildings worldwide. For more information about what we do, please get in touch.

References

Figure 1: https://unsplash.com/photos/four-white-boats-traveling-on-river-beside-big-ben-in-london-YTDATZz_q1M

[1] https://www.pagerpower.com/news/the-role-of-the-contracts-for-difference-cfd-scheme-in-the-cost-of-living-crisis/

[2] https://www.gov.uk/government/news/over-1-billion-budget-for-renewable-energy-auction

[3] https://www.ft.com/content/73f52840-8ee4-4564-98c1-1e14f9b41924

[4] https://www.bbc.co.uk/news/business-60295177