Posted on: 22/05/2018
Changing the rules for the 2017 Contracts for Difference (CfD) auction pushed up the cost to consumers by £1.5 billion over 15 years, according to the National Audit Office (NAO).
Dame Margaret Hodge had asked the NAO to investigate whether the Department for Business, Energy & Industrial Strategy’s (BEIS’s) decision to introduce a 150MW cap for dedicated biomass with combined heat and power, anaerobic digestion and advanced conversion technology had pushed up the price for consumers.
The report concluded that the cap had raised the price by allowing more-expensive methods of producing power to win contracts against cheaper options.
BEIS has already acknowledged the issue and said it will not use the cap in its current form during future auctions.
The 2017 auction secured 3.3GW of capacity at a lower price than expected thanks to falling offshore wind costs.
Calls for no cap in 2019
James Court, Head of Policy and External Affairs at the Renewable Energy Association, said: “While this report focuses on fuelled technologies such as biomass and biomethane, similar reforms have unnecessarily excluded low-cost solar and onshore wind from competing.
“In our view there should be no cap in the next auction, scheduled for spring 2019, and this report adds to that view.”
Lawrence Slade, Chief Executive of trade body Energy UK, added: “We now need the Government to set out clarity over future auctions and the technologies participating in them.”