Utility Week

24 | APRIL 2022 | UTILITY WEEK Generation needs to be the case: "A schedule of capac- ity and budget going forward would be great. I think that's something the govern- ment can do. It's something they do in other countries." "Ireland, for example, has a schedule of auction parameters. I don't think there's any reason the government can't do that, obvi- ously with the caveat that the situation may change and they may want to tweak those or they may want to produce a range." "But we know where we need to get to," he says. "We are decarbonising the power system by 2035. We have some really good models and projections from the likes of the Climate Change Committee and the Electric- ity System Operator telling us what sort of volumes that means in terms of capacity, so there's no reason why the government can't use those and set out what they expect to be procuring and when. "Auctions † ve years away are less cer- tain, but for auctions in the next two or three years there should be a really clear set of parameters already." No threat to competition All other things being equal, a larger number of auctions will mean fewer projects bidding in each. Is there a risk they could become less competitive as a result? Wharton doesn't believe so, even with o‰ - shore wind projects, which tend to be much larger and therefore less numerous: "There are some big projects out there but for com- petitive tension in an auction you only really need one project to be at risk of failing… The risk of one project failing is what will drive down the price in the auction because obvi- ously you don't want to be that project. "Even with only a few projects in an auction it can be competitive and of course government has other levers they can pull. They've got the administrative strike prices and their budgets. Those sorts of levers they can pull to make sure consumers get value for money." By and large, Pizzey agrees: "They'll just adapt the CfD round depending on whatev- er's out there and available… I imagine they will just be highly responsive to what's in the pipeline." However, this may mean not holding an o‰ shore wind auction every year, at least to begin with. He says there are a decent num- ber of projects that will be bidding into the fourth allocation round but there's a bit of a gap a" er that: "There isn't much in the o‰ - shore pipeline right now that's ready to bid." He says there is a "huge pipeline of poten- tial projects" from the Crown Estate's fourth leasing round and Crown Estate Scotland's ScotWind leasing round, with the former granting seabed rights to 8GW of project in February last year and the latter awarding rights to 24.8GW in January of this year. But, he adds, "they're all quite far away". Remaining obstacles Overall, the response to February's announcement is one of enormous positivity. So then, is the road now all clear for the industry to get on with building the many gigawatts of low-carbon generation the UK will need to reach net zero? No quite, says Pizzey, because there are still several other bottlenecks such as con- senting: "There's going to be a whole lot more projects going through that process so it's going to put a lot of strain on leasing and consenting governing bodies just to get through the sheer number of applications". There is also the matter of grid capacity, particularly for projects in Scotland: "You can't just add 25GW of o‰ shore wind capac- ity and expect it all just to come as planned. A lot of other things have got to happen in terms of developing the grid infrastructure, which is a decade challenge really." Wharton says another issue is how to drive investment in nascent pot 2 technolo- gies such as ž oating wind and tidal stream: "We'd like to continue to see minima avail- able for those technologies going forward to make sure we continue learning by doing." "I'm not sure CfDs as they are currently constituted quite work for innovative tech- nologies that we're trying to get up from ear- lier technology readiness levels and into full commercial deployment," remarks Hyman. "In the case of ž oating o‰ shore wind, you might want to align that better with the lease process and other aspects of the devel- opment process so you're not expecting peo- ple to invest a great deal of time and money to get a lease before they've really an idea whether they're going to get a CfD. It may be that the hurdles that you have to go through to get a CfD might be slightly di‰ erently aligned." There do appear to be serious e‰ orts being made to address some of these con- cerns, with the government and Ofgem recently launching a joint review of o‰ shore transmission. As part of the review, BEIS has proposed taking a more centralised, strategic approach to the development of o‰ shore wind. The department said this could include issuing an upfront plan for where and when o‰ shore wind will be deployed. The plan could then provide a schedule for combined CfD and leasing rounds that could be coordi- nated with the installation of the necessary network infrastructure. Ofgem also gave an update in February on its plans for the reform of transmission network charging, another key concern for renewable developers. While indicating that it still believes the large regional di‰ erences that developers in Scotland have complained about remain a necessary feature of the regime, the regulator said it will instruct National Grid Electricity System Operator to lead e‰ orts to come up with some quick † xes to the unpredictability and volatility of charges, which it accepts are a problem. And most recently there have also been reports that as part of its response to the Ukraine invasion, the government is con- sidering relaxing the planning restrictions introduced in 2015 – o" en described as a de-factor moratorium – that made it much more di¢ cult to build onshore wind farms in England. With the rollout of renewables now look- ing to be stepping up a gear, "we need to be thinking about what the market looks like once we get to net zero", Wharton concludes. "I don't think getting lots of renewables on to the system is a challenge now. The CfD has been a great tool at doing that and it does it at a low cost. "I think the question is really: how do we enable the ž exibility that we need on the system, whether it be short or long-term stor- age, demand-side response – all those sorts of tools that will enable a truly net zero sys- tem – rather than relying on gas peakers to † ll the gaps?" Tom Grimwood, news editor continued from previous page Analysis If this is an annual process going forward that you have confi dence in, it's much more likely that you're going to invest to develop those capabilities right through the supplychain." Merlin Hyman, chief executive, Regen If this is an annual process going forward that you have confi dence in, it's much more likely that you're going to invest to develop those capabilities right through the supplychain." , chief executive, Regen

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