Renewable Energy: Finance

Department for Business, Energy and Industrial Strategy written question – answered at on 16 June 2020.

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Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Energy and Climate Change)

To ask the Secretary of State for Business, Energy and Industrial Strategy, what assessment he has made of the potential merits of removing the capacity cap from contract for difference auctions; and if he will make a statement.

Photo of Kwasi Kwarteng Kwasi Kwarteng The Minister of State, Department for Business, Energy and Industrial Strategy

Capacity caps can drive competitive auctions and deliver value for money for consumers. In the absence of a capacity cap or similar constraint, competitors in Contract for Difference auctions would have no incentive to bid below the wholesale price of electricity. A capacity cap was first deployed in the third Contract for Difference auction in 2019, which secured nearly twice the capacity of the previous auction with a 30% reduction in clearing prices. We continue to keep all aspects of the Contracts for Difference Scheme under review and will publish auction parameters in due course.

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