Utility Week

UTILITY WEEK | JANUARY 2021 | 17 Policy & Regulation Offshore wind to compete in separate CfD pot The government also confirmed key details of the fourth contracts for difference (CfD) auction, due to open in late 2021. The auction's capacity will increase from 5.8GW in 2019 to 12GW, with offshore wind moved to its own pot, as opposed to compet- ing against other technologies. research associate at the University of Oxford's Environmental Change Insti- tute, added: "What's still missing is the detail as to how they're going to achieve that." Former Ofgem chief executive Dermot Nolan, now a consultant at Fingleton, said Boris Johnson's support for both hydrogen and heat pumps was "symbolically very significant" and added "it's one of the first times I've seen a politician actually accept heat is an issue and talk about it". Nolan said it was telling that the government had not risked "picking a winner" on decarbonisation of heat and that it was pragmatic to see a role for both technologies in the future. He said: "There is some forming opinion that there may well be regional solutions on heat. Hydrogen does seem a good fit in the north and northeast but then you look at the South West and think, is there really going to be mass production of hydrogen in Corn- wall and Devon? Probably not, and so heat pumps are a sensible solution." Rosenow said it is now essential that the government goes further on energy efficiency – the weak link in the chain and one which will be vital for the cost-effective decarbonisation of heat, whichever path Britain ulti- mately chooses to follow. Meanwhile, distribution network operators (DNOs) told Utility Week they welcome the heat pump target as providing much-needed certainty to start planning investments. Patrick Erwin, policy and markets director at Northern Powergrid, said: "W e're confident we can deliver that capacity as long as it's planned and as long as the regulator gives us the allow- ances so we can properly tool up." At the same, Erwin cautioned that achieving the target will require a significant increase in network capac- ity and that co ordination is therefore essential. He said DNOs will need to "focus on areas where there is existing capacity first and then on areas where there's a relatively thin network a bit later. It's all very doable but it's not a walk in the park". "What we don't want to do is take a street and try to do all the houses all at once if that street hasn't already pot, all turbines within the wind farm will need to be floating and situated in offshore water depths of at least 45 metres. If an off- shore substation is required, it can be either floating or fixed to the seabed. The government's decision followed feed- back from respondents to the consultation who said a 60-metre cut off was "too restric- tive". Given the emerging nature of the tech- nology, some were worried it would force early stage pre-commercial demonstration projects with less operating experience into deeper and "more difficult" waters. The changes to the CfD regime also include the removal of the distinction between delivery years in auctions so that they clear at a single price. Meanwhile, new contract holders will no longer be allowed to collect top-up pay- ments during any period in which whole- sale prices are negative. Under the current arrangements, this rule only applies when negative prices persist for six hours or more. The Energy White Paper confirmed that CfD auctions would continue to take place every two years To read more on these changes and for further reaction, go to https://utilityweek. co.uk/low-carbon-auctions-no-longer- technology-neutral/ been checked and if necessary reinforced for that rollout," he explains. "If we're talking about one or two houses on every street, every year, and you can see it building up slowly, that's fine." Conversely, he warned that if there is an approach to roll out heat pumps to every home in a particular town over the course of one year, it will be problematic. Ian Cameron, head of innovation at UK Power Networks (UKPN), said the commitments on both heat pumps and electric vehicles, when taken together, will allow DNOs to operate a "one touch" policy for upgrading domestic power supplies. Cameron and Erwin both expect the vast majority of installations to come in new--build and off-gas-grid homes. For more reaction on the implications for decarbonisation of heat, see https://utilityweek.co.uk/new-green- heat-goals-should-mean-no-more- wait-and-see/ "For heat pumps, that's a pretty ambitious target for 2028." JAN ROSENOW, DIRECTOR, REGULATORY ASSISTANCE PROJECT Floating offshore wind projects will be able to bid for contracts for the first time in the fourth round. As previously announced, onshore wind and solar will be included for the first time since 2015. The government has also committed to update guidance for new onshore wind schemes in England to "fully reflect the impacts and benefits to local communities". Alongside the new CfD details, a consul- tation was launched on a Supply Chain Plan, aimed at identifying "increasing the compet- itiveness of UK manufacturers". The government says its proposals are designed to "increase the clarity, ambition and measurability of commitments made by renewable project developers when they bid for contracts in the CfD scheme, and to intro- duce new measures if they subsequently fail to deliver on those commitments". In confirming the inclusion of floating wind projects, the government also cut the minimum water depth criterion from 60 metres to 45 metres. Floating wind will be assigned to pot 2 for experimental technologies, which also includes wave and tidal stream generation, so it is not competing with the more estab- lished and cheaper fixed foundation arrays. To qualify for support through the second

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