UK government halves ring-fenced support for tidal energy in next renewables auction

Regulation & Policy

March 16, 2023, by Amir Garanovic

The UK government has confirmed the £205 million budget for renewable energy projects in the fifth round of contracts for difference (CfD) auction, which features plans to cut the tidal stream ring-fence from £20 million to £10 million.

The £205 million for the fifth round of contracts for difference auction (AR5) includes £170 million for established technologies such as offshore wind, and £35 million for emerging technologies such as geothermal and floating wind, out which £10 million is ring-fenced for tidal stream technologies.

The ring-fenced budget for tidal energy is therefore halved when compared to £20 million that was made available for the industry in the AR4 auction, which awarded over 40MW of new tidal power capacity to four tidal energy developers.

The AR5 is scheduled to open for applications on March 30, with the results expected in late summer/early autumn of 2023.

Ring-fence reduction risks realizing UK’s tidal stream energy potential

Illustration/Orbital Marine's O2 floating tidal energy turbine (Courtesy of Orbital Marine Power) — Illustration/Orbital Marine’s O2 floating tidal energy turbine (Courtesy of Orbital Marine Power)

Reacting to the AR5 changes regarding tidal energy ring-fence, the association acting as ‘the voice’ of tidal stream and wave energy industries, the UK Marine Energy Council warned the reduction risks realizing the UK’s tidal stream energy potential.

A reduced ring-fence will deliver fewer projects, increase the cost of project delivery, and risks the UK’s first mover advantage in marine energy, according to UK Marine Energy Council.

An ongoing £20 million ring-fence would have delivered multiple projects across the UK, provided a clear investment pathway to drive down costs for consumers and supported the industrialization of the UK tidal stream energy sector, the association argues.

Sue Barr, chair of UK Marine Energy Council, said: “We welcome the UK Government’s ongoing support for tidal stream. However, a reduced ring-fence will deliver fewer projects and increase the cost of project delivery.

“Maintaining the £20 million ring-fence would have supported projects across the UK from the Isle of Wight to Anglesey, Orkney to Shetland.

“The industry shares government’s desire for tidal stream energy to take the same cost reduction journey as wind and solar. This will be achieved through deployment, which requires consistency from the policy environment.

“I hope the government reviews today’s decision, retains the £20 million ringfence as set in AR4, and works with industry to ensure the UK’s project pipeline is supported. This is necessary to realize the UK’s tidal stream potential and to unlock investment in coastal communities and beyond.”

Concluding, UK Marine Energy Council echoed the industry’s call to the government to maintain the £20 million ringfence that was set in the previous renewables auction.