United Kingdom – As part of its flagship renewable energy auction scheme, the UK Government will invest £20 million per year in Tidal Stream electricity across the UK, ushering in a new chapter for Wales’ tidal industry and creating jobs across Welsh coastal regions.
The announcement will pave the way for a thriving Welsh tidal power sector, with the funds supporting marine technologies that could benefit the whole of Wales and the rest of the UK.
The UK Government will ensure that £20 million per year is ringfenced for Tidal Stream projects as part of the fourth allocation round of the Contracts for Difference Scheme, which will open next month, giving Wales’ marine energy sector a chance to develop technology and lower costs in a similar way to its world-leading offshore wind industry. This brings the total funding for this allocation round to £285 million per year across the United Kingdom.
Wales already has excellent tidal stream resources and is well positioned to take the lead in marine energy globally. The Menter Mon Morlais project, which is based off the coast of Holy Island, has the potential to put Ynys Môn on the map for tidal stream energy. Anglesey may benefit from a ringfenced tidal stream budget, as well as the high-skilled job opportunities that this project may bring to the region.
Wales’ marine technologies have the potential to significantly contribute to the UK’s decarbonization commitments over time, as well as support hundreds of green jobs across the country, with projects currently in development in North-West Scotland, North Wales, and the English south coast.
Reliable source of power
Given the predictability of the tides, tidal energy has the potential to be a very reliable source of generation. Incorporating this into Wales’ low-carbon energy mix will make it easier to match supply with demand, building on the UK Government’s commitment to developing a strong, domestic renewable energy sector to reduce reliance on fossil fuels and exposure to volatile global gas prices.
The UK Government will outline plans to launch the largest ever Contracts for Difference (CfD) allocation round on Thursday 25 November, with this new ringfencing for Tidal Stream expected to bring the total budget for the fourth allocation to £285 million per year.
The Contracts for Difference (CfD) scheme is the primary means by which the government encourages investment in low-carbon electricity. The scheme has aided in the delivery of significant new investment and capital cost reductions for some renewable technologies, such as lowering the price of offshore wind by 65 percent.
The Contracts for Difference Scheme’s fourth round will begin on December 13, 2021. The UK Government will launch this auction with the goal of supporting up to 12GW of low-carbon electricity capacity – more than the previous three rounds combined.
As green technology advances, costs continue to fall, with solar and wind now cheaper than existing coal and gas power plants in most of the world. This is due to clear government signals and investment prior to and during the COP26 climate change summit, as well as targeted support that boosts private sector investment, creates high-quality jobs, and builds industries and technology as the UK recovers from the pandemic.
The effectiveness of the scheme’s design in lowering costs has been demonstrated in the past: between the first allocation round in 2015 and the most recent round in 2019, the price per unit (MWh) of offshore wind fell by approximately 65 percent.
