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8 | 27TH NOVEMBER - 3RD DECEMBER 2015 | UTILITY WEEK Policy & Regulation Rudd confirmed that the next contracts for difference (CfD) auction will take place by the end of 2016, paving the way for up to 10GW of additional offshore wind on the condition that costs come down. "If they don't, there will be no subsidy. No more blank cheques," Rudd said, point- ing to 35 per cent reduction in solar costs in the past three years. "If that happens, we could support up to 10GW of additional offshore wind in the 2020s," she said. Again, the capacity ambition is one that is already expected by National Grid and the call for cost reduction is one that we have heard before, oen from the offshore wind industry itself. A study two years ago by RWE Innogy and the German Offshore Wind Energy Foundation declared that if 9GW of capac- ity was installed by 2023 globally, the cost of electricity generation could fall by 31 per cent. The report also assessed an "optimum market scenario" where 14GW of offshore wind was developed by the early 2020s, and it claimed this would result in a cost reduc- tion of 39 per cent. Quite how much money will be avail- able to offshore wind in the CfD funding pot for each round, or how the government will police cost reductions, like much of the detail in the reset, remains to be seen. But perhaps the most surprising element of Rudd's reset is the lack of attention it pays to innovation. Demand-side response has already been identified by National Grid as a key energy sector tide change for the coming years. And both energy efficiency and con- sumer costs have been touted as key govern- ment concerns. If Rudd's key goal was to position the UK favourably ahead of the Paris talks she has no doubt succeeded, but a reset of the energy industry is still to come. "The energy sector will fully play its part but we need government to provide long-term poli- cies so investors find energy projects attractive." Lawrence Slade, chief executive, Energy UK "With energy prices the top financial concern for consumers, it's right that the government delivers investment in new genera- tion at the lowest possible cost." Richard Lloyd, executive director, Which? "It appears that the secretary of state is bending over backwards to highlight the benefits of gas-fired and nuclear power, while overstating the chal- lenges of increasing our renewable energy capacity." Niall Stuart, chief executive, Scottish Renewables "As the country that used coal to start the indus- trial revolution, it is right that we celebrate this historic moment as the UK becomes the first major economy to turn away from this deadly, polluting source of energy." John Sauven, executive director, Greenpeace "The government's appar- ent preferred options of nuclear and gas, and an old fashioned grid are not cheap and will not be subsidy free for decades." Juliet Davenport, chief executive, Good Energy "Amber Rudd's speech quite rightly focuses on the necessity of a secure natural gas supply, along with nuclear and renewa- bles, in meeting the UK's energy needs. This further underlines the national imperative and urgency for exploration of our British shale gas resources." Francis Egan, chief executive, Cuadrilla Reaction "I want energy policy to be boring… Frankly, if at all possible, energy policy shouldn't be noticed." Energy secretary Amber Rudd Winners and losers from the policy reset Loser: Coal – under the government's plans, the use of coal plants will be restricted from 2023 and then all will be shut by 2025. Loser: Onshore wind and solar – Rudd reiterated that subsidies for onshore wind and solar will be removed because "we have enough onshore wind in the pipeline to meet our 2020 expectations". Loser: Demand-side response – this was "intentionally overlooked" by the government, according to former shadow energy minister Tom Greatrex, following negative headlines surrounding the use of demand-side response earlier this month Winner: Nuclear and gas-fired power stations – these will be expected to fill the genera- tion gap le by the departing coal-fired power stations. Winner: Shale gas – Rudd called for "our shale potential can be exploited safely" to increase the UK's energy security and reduce its dependence on imported gas. Winner: Offshore wind – Rudd stated that up to 10GW of additional offshore wind could be developed under the second CfD auction round