09:25 The Minister for Energy, Clean Growth and Climate Change (Greg Hands)

The regulations were laid before the House on 11 May 2022. The draft instrument makes a number of amendments to the Contracts for Difference Regulations 2014 and the Electricity Market Reform Regulations 2014. Those amendments include changes to contracts for difference delivery and supply chain plan policy in preparation for the fifth allocation round. They will help support the ambition for the CfD allocation round, planned to open in March 2023, delivering on the ambitions set out in the “Net Zero Strategy” and the “British energy security strategy” to make progress towards the 2050 net zero target.

On 9 February 2022, the Government announced that CfD allocation rounds will run annually. The increased CfD round frequency underlines the Government’s commitment to achieving low-carbon electricity generation to achieve a fully decarbonised electricity system by 2035, subject to security of supply. The current policy approach to CfD delivery and supply chain plans needs to be strengthened in the context of annual allocation rounds. That will ensure the scheme continues to operate effectively, encourage low-carbon generation and provide confidence to investors and supply chain companies. It will support the delivery of those renewable technologies identified in the “Net Zero Strategy” and the “British energy security strategy” that are key to decarbonising the power sector, such as offshore wind, onshore wind and solar.

Achieving our carbon budget and net zero targets will require deployment across a range of home-grown, green technologies at an unprecedented scale and pace that will support our transition from reliance on fossil fuels. Therefore, I commend the regulations to the Committee.

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09:46 Greg Hands

Floating offshore wind is a technology on the verge of significant commercialisation and deployment within the next five years. Being at a key juncture in terms of its deployment means that certain emerging technologies, like floating offshore wind, have the potential to play a really important role in helping us to meet net zero. Bringing those projects into the supply chain process will allow BEIS to support the development of the associated supply chain at the earliest stage, by encouraging the industry to invest in competitive supply chains and accelerate cost reduction.

I hope that my responses have provided the necessary assurances so that Members can approve the SI. The changes in the regulations are essential to ensuring that the next CfD allocation round, which will start in March 2023—the first annual round—is a really important reform to drive through more renewable energy in this country. The regulations will help to make sure that our supply chains and other parts of the process are as best supported as possible, to make sure that we support the pace of renewable deployment while continuing to ensure value for money for consumers. That is why I urge the regulations to be made now, ahead of the next CfD allocation round in next March, so that developers have certainty as to who will be eligible to take part and on what basis. I therefore urge the Committee to agree to the regulations.

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