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ACT and biomass schemes backed in CfD auction

Six advanced conversion technology (ACT) facilities and two biomass combined heat and power (CHP) plants have been approved in the second Contracts for Difference (CfD) allocation round for less established technologies.

The Business, Energy and Industrial Strategy department confirmed the results of its £176m renewable power auction, which also included three offshore wind schemes.

The projects are set to generate 3.3GW of electricity and are dominated in scale by offshore, which have a combined capacity of 3,196MW compared with the ACT and biomass total of 150MW.

All but one of the ACT and biomass schemes were at the strike price of £74.75/MWh (see box below). The strike price for the Redruth EFW facility was £40/MWh. All are in England apart from Station Yard ACT (Wales) and Grangemouth biomass with CHP (Scotland).

The ACT schemes (total capacity 64.31MWe) are:

  • Drakelow Renewable Energy Centre – developer Future Earth Energy (Drakelow); 15MW capacity
  • Station Yard CFD 1 – developer DC2 Engineering; 0.05MW
  • Northacre Renewable Energy Centre – developer Northacre Renewable Energy; capacity 25.5MW
  • IPIF Fort Industrial REC – developer Legal and General Prop Partners (Ind Fund); capacity 10.2MW
  • Blackbridge TGS 1 – developer Think Greenergy TOPCO; capacity 5.56MW
  • Redruth EFW – developer Redruth EFW; capacity 8MW

The biomass with CHP schemes (total capacity 85.64MWe) are:

  • Grangemouth Renewable Energy Plant – developer Grangemouth Renewable Energy; capacity 85MW
  • Rebellion – developer Rebellion Biomass LLP; capacity 0.64MW

Martin Williams, senior consultant at Ricardo Energy and Environment, said the announcement should be seen as positive news for the future of ACT plants in the UK.

”Given the way that the second round was structured – not least the imposition of a 150MWe cap for fuelled schemes and the expectation that other technologies (especially offshore wind) would bid well below the administrative strike price and account for significant total capacity – there was always a risk of ACT schemes being marginalised. Nonetheless, six ACT schemes totalling some 64MWe of capacity were successful, demonstrating the continuing ability for ACTs to compete within the CfD regime. 

”The amount of successful ACT capacity is similar to that in the first allocation round (62MWe between three schemes). As such, the second allocation round indicates a shift towards a greater number of smaller projects. However, this can be seen as an opportunity to develop a larger group of reference projects within the UK context on which to further develop investor confidence in this group of emerging technologies. 

“The future landscape looks interesting, with no anaerobic digestion schemes receiving contracts in this round and strike prices in the 2022-23 delivery year falling as low as £40 against administrative prices of £115. Also, with a cluster of three ACT schemes and a dedicated biomass scheme all due to be located in central England, the results of the round may well have implications going forwards for feedstock markets in the region.”

James Court, head of policy and external affairs at the Renewable Energy Association, said: “The latest renewables auction shows huge price reductions across the board, with offshore wind, energy from waste and biomass clearing at prices from £57.50-£74.75.

“These results show that renewables are now the most cost-effective form of any energy generation which can future-proof both the UK grid and provide sustainable new jobs in the UK. Surely now is the time for the Government to commit to a low-carbon industrial strategy.”

The last such auction took place in 2014, with results announced in 2015. As there was no ’ring-fenced’ funding for wave or tidal projects this time, none secured a contract.

Year of reckoning for ACT

CfD

A Contract for Difference (CfD) is a contract between a low-carbon electricity generator and the Government-owned Low Carbon Contracts Company, introduced as part of the now implemented Electricity Market Reform programme. An operator is paid the difference between the ‘strike price’ – a price for electricity reflecting the cost of investing in a particular low-carbon technology – and the ‘reference price’– a measure of the average market price for electricity in the GB market. It gives greater certainty and stability of revenues to electricity generators by reducing their exposure to volatile wholesale prices while protecting consumers from paying for higher support costs when electricity prices are high.

Source: Beis

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