The Contracts for Difference support scheme for renewables should be reformed to attract the investment to achieve decarbonisation of the power sector, according to industry body RenewableUK.
In a manifesto looking at what needs to change for the system to be fully decarbonised by 2035, it said although the scheme has been a success, the current market set up may not be enough to deliver the volume of projects needed.
Surging global demand for offshore wind is increasing competition for investment and putting pressure on supply chains. These pressures, along with maturing technology, means that the trend of ever cheaper prices may be at an end.
RenewableUK argues that an ‘evolution’ of the CfD is now needed to incentivise long-term capital investment in the sector.
It recommends that the Government should also consider new policies to make the UK more attractive for investment such as creating offshore wind enterprise zones where businesses can qualify for tax reliefs or tax credits.
RenewableUK’s Chief Executive Dan McGrail said: “Speed and scale are key: we must revolutionise the rate at which we build new projects onshore and offshore. Working closely with Government and local communities, we need to transform the way we plan and regulate our energy system, to make the UK the best place to invest in by reforming the CfD mechanism.
“This will help us to develop our supply chains and build up whole new industries in innovative technologies like floating wind technology and green hydrogen, which we can export worldwide.”