February 26, 2015 / 12:25 PM / 5 years ago

Britain awards renewable subsidy contracts worth $489 million

LONDON (Reuters) - Britain has awarded investment contracts worth more than 315 million pounds ($489 million) to 27 renewable energy projects in the first allocation round of its new contracts-for-difference (CfD) scheme.

The scheme gives renewable power generators certainty of a minimum electricity price over 15 years. It will replace the Renewables Obligation, the main support mechanism for large-scale renewables projects, which runs out in 2017.

The projects awarded CfDs will deliver 1.1 gigawatts of power generation capacity in total and include two offshore wind farms, 15 onshore wind farms and five solar photovoltaic (PV) projects, the government’s Department of Energy and Climate Change said in a statement.

“These projects could power 1.4 million homes, create thousands of green jobs and give a massive boost to home-grown energy while reducing our reliance on volatile foreign markets,” Energy and Climate Change Secretary Ed Davey said.

Among the projects were Scottish Power Renewables’ East Anglia One 714 megawatt (MW) offshore wind farm project, Mainstream Renewable Power’s 450 MW Neart na Gaoithe offshore wind farm off the Scottish coast and three RWE Innogy onshore wind projects.

In the CfD auction, strike prices for offshore wind ranged from 114.39 pounds to 119.89 pounds per MWhour. For onshore wind, strike prices ranged from 79.23 to 82.50 pounds/MWh and for solar PV they ranged from 12 to 19.1 pounds/MWh, a government document showed.

Some solar investors were disappointed that only five solar projects totaling around 72 MW in capacity won contracts.

“We expect to see more solar projects enter the CfD auction process in the next round. By (that) time, falling costs will mean solar is broadly cost competitive with onshore wind and this should lead to a significant solar CfD allocation,” said Jamie Richards, head of infrastructure at Foresight Group, one of the largest solar investors in Britain.

The next round of CfD auctions will be held in the autumn.

The government said funding for CfDs for renewables and carbon capture and storage technology could rise to more than 1 billion pounds per year by 2020/21.

“The budget for the next allocation round will be confirmed later this year - 50 million pounds more has already been indicated for established technologies,” it added.

Reporting by Nina Chestney; editing by Susan Thomas and William Hardy

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