BEIS Consultation On Proposed Amendments To The Contracts For Difference Scheme For Renewable Energy Generation

Introduction

Thank you for the opportunity to respond to the UK Government's consultation on the proposed amendments to the CfD scheme including the proposal to include remote island wind projects in the next CfD auction for less established technologies.

Brodies LLP is a leading law firm based in Scotland with wide experience in the renewables sector, particularly in windfarms in the Scottish islands and in CfD projects, giving us insight to some of the issues raised in the consultation.

We are providing a response in respect of a number of the questions asked in the consultation where we believe our experience enables us to provide informative feedback.

Question 1

The government welcomes views on whether the proposed approach is an effective means of supporting onshore wind on remote islands.

The Measure of Effectiveness

The measures of effectiveness are twofold. Will windfarms be built in the UK's remote islands as result of the policy? And, second, will they provide value for money for the consumer? If no remote island wind (RIW) projects are built the policy could not be said to have been effective. Equally, if the price does not offer value for money, consumers will pay too much for their electricity.

The CfD contract is a proven means of supporting wind farms and many onshore wind farms are already in construction on the basis of the first CfD auction. A RIW CfD contract on appropriate terms can therefore be an effective means of supporting onshore wind on remote islands. The question is not so much the CfD mechanic as the ability of RIW generators to secure CfD contracts in a CfD auction in sufficient numbers to enable the connection to the island to be installed.

Barriers

We anticipate three particular barriers to RIW generators securing CfD contracts. First, there appears to be a very significant disparity between the terms on which RIW projects can connect to the grid and the terms on which offshore wind (OW) projects can connect to the grid. Second, sufficient projects on each island must secure CfD contracts in order to enable the grid connection to be built. Third, OW generators are able phase their projects under the OW CfD contract.

Grid Connection Terms

There are a number of ways in which the grid connection terms expose RIW generators to risks to which OW generators are not exposed - namely the level of charges, grid security costs and the lack of control over the connection works.

The combination of the high cost of the island connectors and locational charging...