Commons Sense

House of Commons · Ministers' Questions

Contracts for Difference Scheme

Tuesday 19 September 2023 · 9 questions

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

At a glance

Answered 1 Partly answered 6 Not answered 0

Key points

  • The contracts for difference scheme has contracted over 30 GW of capacity since 2014, including 20 GW of offshore wind.
  • The Government is engaging with the sector in advance of the sixth allocation round to ensure a smooth transition.
  • The Secretary of State is focusing on investment in offshore wind projects and addressing investor concerns about certainty and grid connections.

Topics (select to filter)

Questions & Answers

Q1 Selaine Saxby
Climate Energy
Context

The Contracts for Difference (CfD) scheme is crucial for the development of floating offshore wind in the UK.

Question

What assessment has she made of the potential implications of the outcome of the contracts for difference allocation round 5 on the future development of floating offshore wind?

Answer from Claire Coutinho

Our contracts for difference scheme is a UK success story, having contracted more than 30 GW of capacity, including 20 GW of offshore wind, since 2014. AR5 delivered a record number of clean energy projects, enough to power the equivalent of 2 million homes, and the Government's commitment to offshore wind remains unchanged, which is 50 GW by 2030.

Partly answered

Not addressed: Did not specifically address how AR5's outcome affects floating offshore wind development in future.

Was this summary accurate? Tell us

How accurate was this summary? (1 = poor, 5 = spot on)

Q2 Peter Aldous Con
Climate Energy
Context

The Contracts for Difference (CfD) scheme has flexibility to adapt based on economic conditions.

Question

I welcome my right hon. Friend to her place. The great advantage of the CfD scheme is that with forward planning it has the flexibility to adapt to changing economic conditions. Can she therefore confirm that the Government will be working collaboratively and straightaway with industry to ensure a successful round 6 so that offshore wind can get back on track, and UK consumers and the UK economy can benefit from low-cost, low-carbon energy?

Answer from Claire Coutinho

I thank my hon. Friend for his long-standing support in this area and I can confirm that we are wasting no time in engaging the sector in advance of AR6. I personally spoke to offshore wind stakeholders following AR5 and confirmed our commitment. The Minister for Energy Security and Net Zero held a roundtable with the sector on 12 September. We are listening to the sector and annual auctions mean we can respond quickly.

Answered
Was this summary accurate? Tell us

How accurate was this summary? (1 = poor, 5 = spot on)

Q3 Selaine Saxby
Climate Energy
Context

The Contracts for Difference (CfD) scheme's Round 5 faced issues.

Question

Thank you, Mr Speaker. I am keen to understand better what more can be done to assist floating offshore wind in AR6 following what happened in AR5.

Answer from Claire Coutinho

I know my hon. Friend is a long-standing supporter of offshore wind. We have announced that AR6 will open in March 2024 and we have published that timetable. We are supporting floating wind technology through different programmes and manufacturing investment schemes too.

Partly answered

Not addressed: Did not address additional support specifically for floating offshore wind, only general support.

Was this summary accurate? Tell us

How accurate was this summary? (1 = poor, 5 = spot on)

Q4 Angus MacNeil SNP
Climate Energy
Context

Many renewable projects have been built on the strength of Contracts for Difference (CfD) contracts.

Question

With many renewable projects built on the strength of contracts for difference, but with reports of many not invoking these contracts and instead benefiting from the higher energy prices, can the contracts in principle be invoked later, when prices fall, or could the Government enforce the invoking of the CfD contracts now, at the start of the generation of these projects, rather than their taking the high prices while they can?

Answer from Claire Coutinho

The CfD programme has driven prices down over time to enormous effect, by 70% since they started, which is much more than people expected. I would be happy to take the hon. Gentleman's particular point away but overall this is a successful programme, and our annual auction changes will also make a difference.

Partly answered

Not addressed: Did not directly address the possibility of invoking contracts later or enforcing immediate invocation.

Was this summary accurate? Tell us

How accurate was this summary? (1 = poor, 5 = spot on)

Q5 Andrew Bridgen Con
Energy
Context

There is a debate about baseload capacity to manage renewable energy projects on the grid.

Question

Given the unreliable and intermittent nature of both solar and wind-generated energy, we already have more of these projects than the grid can efficiently manage. Does the Secretary of State agree that what we really need is more reliable baseload capacity and that that can only be delivered via fossil fuels or nuclear?

Answer from Claire Coutinho

We have a strong focus on energy security, and that means having a just transition to clean energy but also investing in nuclear. The hon. Gentleman may have seen that we have started the capital raise for Sizewell C, and we support the oil and gas industry as a just transition fuel.

Partly answered

Not addressed: Did not directly address baseload capacity from fossil fuels or nuclear, only mentioned support for nuclear and oil/gas.

Was this summary accurate? Tell us

How accurate was this summary? (1 = poor, 5 = spot on)

Q6 Ed Miliband Lab Doncaster North
Climate Energy
Context

The Contracts for Difference (CfD) Round 5 auction had issues.

Question

I wish the Clerk of the House well in the future, and I warmly welcome the Secretary of State to her new role and congratulate her on her appointment to the Cabinet. I look forward to working together. Let us start with the truth. The offshore wind auction that she inherited was a totally avoidable disaster. It means another lost year for our country and another year of higher bills, and it is because Ministers obstinately refused to listen to warning after warning from industry. RenewableUK estimates that the auction failure will add £2 billion to bills. What is the Secretary of State's estimate of the cost to families of this fiasco?

Answer from Claire Coutinho

I thank the right hon. Gentleman for welcoming me to my place. I am delighted to serve opposite him and face him at the Dispatch Box. There are a couple of things I will point out. If we had tried to do what the right hon. Gentleman suggested, we would have delayed the 3.7 GW of clean energy that we secured, which is able to power 2 million homes. If we want to look at what is going to hurt people and their bills, I would point to his disastrous policies, whether it is the ultra low emission zone, which is hitting people who can least afford it, or his borrowing spree, which will raise inflation.

Was this summary accurate? Tell us

How accurate was this summary? (1 = poor, 5 = spot on)

Q7 Ed Miliband Lab Doncaster North
Climate Energy
Context

The government's approach to Contracts for Difference has been criticised.

Question

I am afraid the Secretary of State is quite wrong about that, because Ireland adjusted the price and had 3 GW of offshore wind. Let us talk about the way that this Government are jeopardising our energy security. They have delivered—[Interruption.]

Answer from Claire Coutinho

Let me tell the right hon. Gentleman about the last 13 years. We have decarbonised faster than any G7 country, while also growing the economy. We have grown renewable energy from 7% of our electricity when Labour left power to 50% now. I am proud of what we have achieved over the last 13 years. We have a proud record when it comes to climate change and a proud record when it comes to renewable energy, and I am proud to defend it.

Was this summary accurate? Tell us

How accurate was this summary? (1 = poor, 5 = spot on)

Q8 Dave Doogan SNP Angus and Perthshire Glens
Energy
Context

The MP criticises the Secretary of State's absence during crucial debates on the Energy Bill and issues regarding offshore wind project auctions. He highlights a chronic energy crisis affecting constituents.

Question

I welcome the Secretary of State to her new role but note her absence during important stages of the Energy Bill and an urgent question on auction round 5 strike price, despite the ongoing energy crisis. What has she been doing in this context?

Answer from Claire Coutinho

During my time as Secretary of State, I have focused on moving forward with all Government priorities related to energy security and transitioning towards a clean future. This includes working on the Energy Bill which I attended for its Third Reading.

Partly answered

Not addressed: The specific actions taken during the chronic energy crisis were not detailed.

Was this summary accurate? Tell us

How accurate was this summary? (1 = poor, 5 = spot on)

Q9 Dave Doogan SNP Angus and Perthshire Glens
Energy Business & Trade
Context

The MP questions the Department's handling of offshore wind projects from auction round 5, highlighting potential costs to consumers. He seeks personal intervention by the Secretary of State for a cap and floor mechanism in pumped storage.

Question

Given the issues with offshore wind projects from auction round 5 and the impact on consumers, can the Secretary of State personally intervene to introduce a cap and floor mechanism in pumped storage as requested by industry?

Answer from Claire Coutinho

I am focused on getting investment into offshore wind projects. After AR5, I spoke with investors to address their concerns about certainty and annual auctions. I will also look at grid connections as important aspects for investment.

Partly answered

Not addressed: The specific personal intervention requested was not addressed.

Was this summary accurate? Tell us

How accurate was this summary? (1 = poor, 5 = spot on)